Compliance

Remote launches a product to help employers combat contractor misclassification

Remote’s investment in the new product comes as a number of countries, including the US, are scrutinizing businesses’ use of gig workers.
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· 4 min read

Remote, a platform that helps employers manage global workforces, launched a new compliance tool for managing contractors and freelancers on Jan. 24.

The tool, called Contractor Management Plus, is intended to safeguard employers from misclassifying workers, according to a press release from the company. It also automates onboarding and recordkeeping, while also allowing companies to pay contractors in their local currency.

Remote’s investment in the new product comes as a number of countries, including the US, are scrutinizing businesses’ use of independent contractors. The Department of Labor recently rescinded a Trump-era standard that had made it easier for companies to classify employees as independent contractors, a decision that could have implications for the gig economy, but is already being legally challenged.

As the gig economy grows and more employers look to hire workers abroad, the product is intended to help HR departments navigate labor regulations in different countries, said Pedro Barros, Remote’s SVP and GM of contractors.

Employees vs. contractors. Remote, which launched in 2019, initially grew its customer base by offering employer of record (EOR) services. Under this model, Remote essentially acts as a proxy employer for companies hiring abroad, handling payroll, benefits, and compliance for businesses in countries where the initial company isn’t legally established. It’s a more involved arrangement than employing workers as contractors, who typically handle issues such as taxation and documentation themselves, Barros said.

Around April of last year, Remote asked Barros to head up a new business unit focused on contractor management, he told HR Brew. “With this, we’re really solving the challenges that companies have in paying and serving their contractors globally,” he said.

With the new tool, employers can generate localized contract templates for contract workers in more than 200 countries, Barros said. Remote also provides customers with information about how contractors should be managed depending on the country where they’re based, including regulations surrounding issues such as timekeeping and laptop usage.

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How Remote built its contractor management tool. Remote leveraged relationships with local labor authorities and its already existing expertise about the risks of misclassification globally to build the product, according to Barros. The rules companies use to determine what separates an independent contractor from an employee will differ depending on where they’re hiring, whether that’s the US, the Netherlands, or Brazil, for example.

Barros noted the risk of misclassifying employees as contractors is particularly high when employers are expanding rapidly. Even as the market has evolved, “There is a strong lack of understanding and knowledge of…what does it mean to misclassify a contractor as an employee, and vice versa?” he said. Employers need to review their arrangements with contractors at least every six months to make sure they can still be considered a contractor, Barros added. If not, a company might consider going the EOR route or hiring the person on its payroll, if it’s set up to do that in the country where they live.

Remote is confident enough that its product lessens companies’ risk for misclassification that it provides liability coverage of up to $100,0000 per contractor.

The company is one of several HR tech firms seeking to cash in on employers’ increasingly complex compliance needs as more seek to hire talent internationally. One of its direct competitors, Deel, recently launched a “compliance hub” tracking regulatory developments across 150 countries.

Quick-to-read HR news & insights

From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.