The explosion of freelance work in recent yearshas been called many things. Some refer to “liquid workforces,”others to “agile talent,” and others talk about “the gig economy.”But whatever terms are used, it is clear that many employers andtheir HR staffs will increasingly be dealing with freelancers, and theunique working world that they inhabit.

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According to the Deloitte Human Capital Trends report, more than30 percent of the U.S. workforce now consists of freelance orcontract workers, and more than half of employers expect the demandfor freelancers will continue to grow.

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In a recent article for the Huffington Post, Ellyn Shook, Chief Leadershipand Human Resources Officer at Accenture, said the digitalrevolution is forcing companies to become much more flexible withtheir workforces. “Leading companies must blur traditionalboundaries to broaden their definition of 'workforce'—finding theright combination of internal employees, freelancers and technologyfor each new challenge,” she wrote.

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Shook said a “people-first” culture has led Accenture to createa workforce that can rapidly change, always emphasizes learning,and uses analytics to constantly restructure the organization.“Watching the future of work unfold, it's not too far-fetched tothink that within 10 years, there will be a 'fully liquidenterprise,' operating with no full-time employees outside of theC-suite,” she wrote.

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A changing job market

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So how did we get here? Some point to generational changes, somenote the influence of technology; whatever the reason, people arethinking about work differently. Jon Younger, managing partner ofthe AgileTalent Collaborative, says the workplace is evolving in a waythat promotes freelance work, or what his company refers to as“agile talent.”

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“More and more people are interested in some form ofparticipation in the freelance economy,” Younger said. “A lowerpercentage [of workers] than ever before want to be a full-time,career employee of a large corporation. A growing number aresaying, 'that's not what I'm interested in,' for any number ofreasons.”

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It's not hard to understand why workers want more flexibility, but whyshould employers shift their business practices to use this agileworkforce? Younger said the ongoing tightening of the labor marketcreates a dynamic that favors companies that meet talent halfway.“Organizations that can do that well will be at a significantcompetitive advantage when it comes to talent management, talentacquisition and reputation management,” he said.

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Younger said that it's important for companies to sit down andthink out how they want to use freelance or contract workers. “It'svery important for senior management and HR to work together to beclear about the philosophy going forward,” he said. Areas likerecruiting and compensation may have to be restructured if acompany begins using freelancers in large numbers.

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The next step, he said, is training managers to oversee bothfull-time, permanent workers and freelancers.

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Engagement and communication

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One of the big challenges presented by freelancers is how tocommunicate and stay on target with projects and assignments.Obviously, regular check-ins are important. But a strategy to keepfreelancers engaged may require more work than just a weekly phonecall. After all, this is a different breed of worker. Manyfreelancers don't have the kind of benefits that full-time workersenjoy; and they don't feel as tied to the company. Managers shouldrecognize that there is some groundwork to do in bringingfreelancers onto the team.

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“Freelancers come with specific skills, but they still need tounderstand the company, the culture, the product, the customer, theteam, the project—the way stuff actually works inside the walls,”writes Jason Averbook, CEO of the Marcus Buckingham Company, inHuman Resource Executive Online. “Progressive HR leaders willgive team leaders the ability to be highly accessible, expertcoaches.” He also notes that companies who use freelancersfrequently will need to find the best technology for monitoring andcommunicating with workers who are usually offsite.

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Younger agrees that there's a new set of skills required frommanagers who oversee both permanent, full-time workers andfreelancers. “There's an additional set of challenges when managersmanage both full-time permanent staff and contract or agiletalent,” he said. With freelancers, he adds, “It's a differentrelationship. It's more of a partnership.”

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The challenges of regulation

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Christine Walters, author and founder of the FiveL Company, says thatemployers face significant challenges in compliance with both stateand federal regulation when it comes to freelance workers.Regulators, she notes, are trying to ensure that companies do notexploit workers who are classified as contract or freelancers.

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“There are employers who are intentionally using workers whomthey're not classifying as employees, to get around paying forbenefits or paying for unemployment,” she said. “In my experience,those employers are rare; it's the few-bad-apples-syndrome.”

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But the bad apples are making things tough for other employers,despite efforts to do due diligence, Walters added. “The greatestchallenge is trying to remain compliant in an environment wherecompliance is defined by myriad sources,” she said. “There areregulatory and statutory definitions of an employee; an IRS test;state tests which do not follow the IRS test; state workers' compand unemployment insurance codes that use different definitions ofemployee; and more.”

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The regulatory requirement minefield has led some companies toreject the idea of using freelancers; others only use them inlimited circumstances. Walters recommends companies look at stateregulations first; if they don't pose too big a problem, the IRStest should be next. “If you pass the IRS test and your staterequirements … I believe that's a clear demonstration of good faithand due diligence to try to comply,” she said.

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Walters added that more discussion between regulators,legislators, and business owners is urgently needed to work out themany difficulties that current regulations pose for companies. “Ithink it's critically important for business owners and HRprofessionals to have a conversation with elected representatives,”she said. “Together we should be able to come up with policy thatworks well for businesses as well as the employee.”

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Younger said that even with the challenges, companies that canmanage multiple workforces as a “total workforce,” will do well inbringing the best talent onboard. “The organizations that figurethis out are going to be a step ahead,” he said.

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