AccuSource Blog

Avoiding Risk & Adding Value: Why Staffing Agencies Should Focus on Background Screenings for Contingent Labor


More than 40% of the U.S workforce is expected to be comprised of contingent labor by the year 2020.


The Growth of the Gig Economy 

As the American work force landscape continues to evolve and change, contingent labor is expected to become an ever more important and increasingly larger part of the economy. According to a study done by Intuit, more than 40% of the U.S workforce will be comprised of contingent labor by the year 2020. This growth will lead to increased competition in the staffing industry; the need for agencies to outperform their rivals and differentiate themselves in a crowded market will be vital. 


Timeliness and Quality are Paramount 

One critical advantage staffing agencies can employ to gain new clients and retain the loyalty of existing customers is delivering quality labor resources quickly and consistently. The onus of responsibility for the actions of contingent employees primarily rests on the organization employing them. However, liability and the effects of negative behavior can extend to both the employer of record and the organization where the work is performed. Contracting companies, as well as the staffing agencies that place workers, potentially may be held responsible for the actions of a temporary worker if due diligence is not done correctly. Companies utilizing contingent labor need to have assurance their temporary workforce is reliable, safe, and qualified for their individual job roles. 


Staffing agencies can benefit greatly from thorough and accurate background screenings on all contingent labor hires.


Advantages of Quality Background Screening Programs 

There are several key advantages to ensuring thorough and accurate background screenings are performed on all contingent labor hires. Direct benefits to staffing agencies in promoting solid employee background screening programs include: 

  • Protecting the Agency’s Brand and Reputation 
    • When a staffing agency places a temporary worker on a job site, that worker becomes a representative of the agency’s brand. Ensuring every worker placed is professional and well-qualified aids in establishing the agency as a quality provider, and further promotes client trust and loyalty. 
  • Insulating the Organization Against Legal Issues 
    • The average cost of a negligent hiring lawsuit is approximately $1 million. If a staffing agency fails to use “due care” and places a worker who is unqualified for the job and/or poses a threat to the customer or the public the agency could, ultimately, be exposed to a negligent hiring lawsuit. A thorough background screening of all contingent labor placements can help to mitigate the risk of subjecting the staffing firm to litigation for negligent hiring. 
  • Detecting False Information 
    • Roughly half of all job applications contain false or incorrect information. Placing a temporary worker in a role he or she is not qualified to support reflects poorly on the placement agency and reduces the likelihood the client will use the agency again in the future. It also negatively impacts organizational growth by minimizing client referrals. Using a reliable background screening company to validate the candidate’s stated qualifications match their actual education, experience, and developed skill set can reduce the risk of placing an unqualified candidate into a sensitive role. 
  • Preventing Unsafe or Criminal Activity 
    • It is imperative staffing agencies have reasonable knowledge of past criminal history or substance abuse risk before placing a temporary worker to promote workplace safety and loss prevention, in addition to overall brand protection for both agency and client. Most background screening programs should include a comprehensive criminal history check. Many positions also dictate the need for appropriate drug screening. 

cost-benefit-analysisThe benefits of a comprehensive background screening program greatly outweigh the costs.


Overall Cost-Benefit Analysis

The staffing industry is extremely cost-sensitive with often razor-thin margins between profit and loss. Savvy agencies are always on the hunt for opportunities to minimize expenses to increase their overall profitability while still maintaining a steady supply of high quality talent to meet client needs. Speed to hire, internal labor and process management and overall candidate experience are also top concerns which can impact each agency’s overall policies and decisions in background screening. However, the cost of a single lawsuit or lost client relationship can have a significant impact on the organization’s financial stability and growth. Selecting the right screening provider partnership is the key to achieving the optimal balance of risk mitigation and business optimization. In a quality partnership, the screening provider should foster open and continuous communication with the agency to ensure both risk mitigation and business development goals are achieved. The right provider can aid staffing organizations in transforming pre-hire and pre-placement screening from required task to business advantage. 

Luke Runnells

Luke Runnells

Interested in learning more about AccuSource's background screening services? Click here or call us at 888.649.6272 today! 

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