The questions to ask before you trust a provider with your contractor program
Up to 75% of enterprises struggle to fill roles, according to ManpowerGroup research. Independent contractors help close this gap by providing the specialist skills and capacity needed to deliver projects successfully.
Working with contractors is particularly valuable for businesses that prioritize agility. Instead of making permanent hires, enterprises can scale their contractor engagements up or down as business needs evolve.
While the benefits of using contractors are clear, engaging them compliantly can be complex, especially if they’re sourced across state, provincial, or national borders. Fortunately, the right agent of record (AOR) simplifies the process by handling many of the complex back-office tasks required to engage contractors. Here, we share key considerations to help you identify an ideal AOR partner.
Start With the Independent Contractor Program You Need to Support
Before comparing AORs, define the independent contractor program you need them to support.
Start with its size and shape. Will the AOR support a small group of specialists working on one project, or contractors engaged across different business units? Consider how many contractors will need support and how much that number may change as projects begin and end.
It’s also worth considering whether the provider offers employer of record (EOR) services, particularly if your workforce program includes both independent contractors and contingent employees. At People2.0, we provide both AOR and EOR services, so enterprises can manage these different types of engagement through one partner.
They Must Be Contractor Classification and Compliance Experts
Independent contractor compliance is complex because there is no universal approach that works across every jurisdiction and engagement.
In the US, for instance, different states use different methods to decide whether someone can be treated as an independent contractor. In California, an engagement must meet all conditions of the ABC test. New York applies a different framework focusing on how much supervision and control the business has over the worker. A classification process designed for one jurisdiction therefore cannot simply be applied in another.
Compliance is also never a one-and-done task. If the contractor’s role or the way their work is managed changes, the engagement may no longer meet the classification requirements. The AOR should therefore have robust compliance checks to ensure contractors are correctly classified, especially as the engagement evolves.
Human Expertise Is Critical to Reducing Misclassification Risk
Contractor misclassification can lead to substantial fines and damage an enterprise’s reputation. Reducing that risk requires someone who can interpret the relevant law and the details of the engagement.
Technology can organize information and flag potential issues. It cannot resolve ambiguous rules or decide how conflicting facts should be weighed. A human-led AOR brings local compliance experts into the final decision, with technology supporting their judgment.
Those experts should also create an auditable and defensible record of the assessment. If the classification is challenged, this trail helps the enterprise show how the conclusion was reached and that the correct review process was followed.
Choose an AOR With Global Coverage and Local Expertise
Working with one AOR across multiple countries gives an enterprise a coordinated program and a single point of accountability. It also makes expansion easier because the business does not need to appoint a new provider every time it enters another market.
The AOR you choose should have on-the-ground experts in each market who keep pace with constantly shifting local regulations. They should also understand the cultural norms influencing how contractors prefer to communicate and receive support. Without local input, an AOR can fall behind compliance changes or create unnecessary friction.
Make Sure the AOR Can Work With Your Existing Program
The AOR’s platform should support the full contractor lifecycle, from classification and contract management through onboarding, payment, and offboarding. Your team should be able to see the status of each engagement and anything requiring action. The more visibility over your workforce, the easier it is to minimize costs and compliance risk.
The platform must also work with the systems your enterprise already uses. Information should move cleanly between the AOR and the tools used by your workforce, procurement, and finance teams.
Many enterprises also use a managed service provider (MSP) or staffing suppliers. The AOR needs to exchange information with these partners and make clear who handles each step. Otherwise, your team ends up passing messages and resolving issues between providers.
Many enterprises also use a managed service provider (MSP) or staffing suppliers. The AOR needs to exchange information with these partners and make clear who handles each step. Otherwise, your team ends up passing messages and resolving issues between providers.
Five Questions to Ask a Potential AOR
There are many questions worth asking before choosing an AOR. As a starting point, the following five distil enterprise requirements into core questions to ask every provider:
- Can you support the countries and contractor volumes we need today, as well as our likely expansion?
- How do your experts assess and document each classification, and what triggers a reassessment?
- Will local experts be available in every market to explain regulatory changes and support our contractors?
- How will your platform manage contracts, onboarding, and payments while working with our existing systems and workforce partners?
- What service levels will you commit to, and what evidence shows you can meet them for a program of our size?
Partnering With People2.0, a Proven AOR Partner
At People2.0, we’ve supported global workforce programs for more than 25 years. Our enterprise EOR and AOR services are relied on by Fortune 500 enterprises and backed by the capabilities you should expect from a trusted partner:
- Expert-led compliance: Local compliance specialists apply current contractor rules to each engagement, with integrated technology supporting their work.
- Broad global coverage: Compliantly engage independent contractors across 130+ markets.
- Proven experience at scale: We complete over 10,000 independent contractor evaluations each year, with zero misclassifications across all regions.
- Reliable back-office infrastructure: We manage contracts, onboarding, invoices, and payments, significantly reducing the work placed on your internal teams.
Whether you’re expanding into new markets or strengthening an existing contractor program, People2.0 has the expertise and infrastructure to support you.
Contact us to discuss your AOR needs.
Frequently Asked Questions
How can an enterprise identify a shortlist of potential agent of record providers?
Start by defining the size, locations, and needs of the contractor program the AOR must support. The enterprise can then choose a provider whose coverage and service best match those requirements.
Which criteria should enterprises use when comparing AOR providers?
Compare shortlisted providers based on their compliance expertise, local knowledge, platform capabilities, and experience at scale. These criteria show whether an AOR can classify contractors correctly and run the program reliably.
How should an AOR work with an MSP or staffing supplier?
An AOR should exchange the necessary information with an enterprise’s MSP or staffing suppliers and make clear who is responsible for each step. This helps prevent delays and repeated work.
What evidence should an enterprise request when comparing AOR providers?
Ask for evidence that the provider has managed similar contractor programs reliably. Enterprise references and service data can show whether the provider performs at the required scale, while compliance claims should clearly state which services and worker populations they cover.
What should an enterprise expect from an AOR platform?
An AOR platform should give the enterprise clear visibility over its contractor engagements, including the work outsourced to the provider. It should show where each engagement stands, flag anything the enterprise needs to approve, and exchange information with its existing systems.
