3 Must Haves for Reducing Contractor Risks
Hiring contractors is always risky, and you shouldn't leave the outcome up to chance.
Hiring a contractor can be useful or even necessary, but there's no way around the fact that it heightens the risks your company takes on.
For one thing, the contractors you hire may not have the same level of safety training that your full-time employees have. They might not have been familiarized with and trained to handle various site-specific hazards. And because they're not permanent members of your team, they might not be fully committed to your workplace safety program and ethos (learn more in Workplace Safety Culture 101).
But that doesn't mean there's nothing you can do about the risks that come with hiring contractors. You can start by carefully vetting them – conducting background checks and contacting previous clients. Regular drug and alcohol screenings can also mitigate your liability risks.
There are hundreds of small steps you can take to minimize the risk of hiring contractors, and I won't bore you with all of them. I will, however, tell you about three important things you must have if you want to reduce your risks when working with a contractor.
Acknowledge the Risks
Before talking about solutions, we need to talk about taking a good, honest look at your risk profile.
Doing away with contract labor isn't realistic for most companies. The rapid pace of technological development means that you will need various specialists to help you upgrade, adapt, and operate in the modern economy. On top of that, labor shortages for highly skilled workers makes it difficult to find someone you can hire to do this specialized work full-time.
So, you'll need contractors. But it's easy to get complacent about hiring them, especially if you hear good things from previous clients. But the fact is that there's no way to entirely avoid the risks, so you need to make sure you've taken some key steps to protect against them.
General Liability Insurance
Okay, so this isn't always something you must have, but it's something you need to make sure your contractor has.
Working with an independent contractor opens you up to a number of liability risks.
If the contractor's shoddy work injures someone, if they accidentally damage heavy machinery while working on your behalf, or if they cause bodily harm to someone while working on your project, your company could become a party in an expensive lawsuit.
If the contractor has general liability insurance, however, you are protected from these liabilities.
You can add the contractor to your own insurance policy. However, this will cost you and most reputable contractors should have their own general liability policy in place. If they don't, you can make it a condition for employing them.
And don't just take their word for it, no matter how honest they seem. Ask to see their certificate of insurance to confirm that they have coverage in force (learn The Truth About Certificates of Insurance).
Include Contractors in Your Safety Program
Your safety program and protocols are the real driving force behind your employees' safety on the job. But it's easy to forget about the people who won't be clocking in every day.
Your safety program should include contractor guidelines that outline protocols related to working with a contractor, as well as your expectations of a contractor's conduct while under your employment. These guidelines should dovetail with your broader company procedures.
Contractors will be less familiar with your company's standards, practices, and culture. They might also have different incentives when it comes to getting the job done, which could encourage them to work quickly and cut corners instead of doing it safely. Given that, it's okay to make some of the contractor's guidelines more stringent than those that apply to your regular employees.
Use a Solid Safety Software Solution
There's so much that goes into vetting, hiring, and working with a contractor – and so much that could go wrong.
A good contractor management software solution will reduce your workload by helping you do things like verify and keep tabs on certificates of insurance, prequalify contractors, and deliver effective online safety training.
Not only that, but it will help you eliminate human error. With so many things to do and stay on top of, it's easy for some things to get missed. If the e-mail reminder to verify that your contractor's insurance policy has been renewed gets buried in your inbox, for instance, you could be exposed to some serious risks.
Now that we have sophisticated contractor management technology, why leave all of this to chance?
As I said above, there are a hundred small steps you can take to make sure that you don't take on too much risk when you hire a contractor. But these three are the big ones. Consider them the bare minimum any time you have to work with someone independent of your company.