What Does Your Contractor Compliance System Need?

Industry Information | January 30, 2023

When organizations decide to implement a contractor compliance system to mitigate their operational, financial, and reputational risks associated with using a contractor network, it can be difficult to know what products to include. PlusOne Solutions, with almost 20 years in the risk and compliance industry, is a great partner to work with to determine what strategies are worth considering and can explain how they work together to protect your organization.

While contractor compliance systems can contain various types of services, among the most common are a vetting of the contractor company, criminal, background, and drug screening of individual contractors, tracking and management of certificates of insurance, Tax Identification Number (TIN) matching against the IRS database, badging, continuous criminal record monitoring and license tracking.

There is a search type that will fully guarantee to eliminate risk for an organization. However, being able to demonstrate due diligence and taking a prudent approach to obtaining information that can be used to analyze risk is a very helpful process to follow. Since contracting relationships involve both companies and individuals, any approach should address information related to both.

Below is a summary of key services that may be considered as part of a comprehensive contractor compliance system:

Servicing Company Screening – a confirmation of their business status, principles, confirmation of address and type of ownership, other known affiliates companies, and other business-level information to confirm the legitimacy of the business. NOTE – this is not a financial/credit check.

Background Check – often including elements such as criminal, sex offender, identity, and driving records to determine if the potential contractor will pose a risk to your organization, customers, or reputation.

Drug Testing – usually done in combination with a background check, will ensure the individual is not posing a safety risk.

COI Management – proactive and ongoing tracking to ensure insurance coverage for the servicing company is in place including proper policy types, limits, language, endorsements, and exclusions are reviewed.

TIN Matching – to confirm the name and TIN information provided on the W9 provided by the servicing company matches the Internal Revenue Service data.

Badging – working in conjunction with the screening services available, electronic, and hard badges can help identify and verify the legitimacy of your network to potential customers.

Continuous Criminal Record Monitoring – works with the background check to provide proactive notification of county criminal issues – arrests, booking, incarceration events – which arise after the initial background check is completed.

License Tracking – many skilled trades require specific licenses to be held to ensure competent performance which considers the state and local requirements that may exist.

Doing even just one or two of the above is a great start but a combination of all these services will provide the most robust program. As each of the above serves a single purpose and provides unique information, it is important to look at how these offerings complement each other. For example, if the business cannot be verified as legitimate, there is no point in proceeding with the screening, drug testing, or badging of individuals who work for the company because you will not be able to effectively pay the entity. If the appropriate licensing is not in place, or the servicing company has engaged a known and habitual felon, there may be implications for the insurance coverage you are requiring the company to hold. While background checks are important, being able to monitor the activity of contracted individuals between background checking cycles also provides very valuable information.

As can be seen, a comprehensive approach to creating a contractor compliance system is going to yield more benefit for your organization than simply making a few cursory efforts like having a servicing company self-certify or providing a single occurrence of a certificate of insurance, never to be followed up again.

A contractor compliance system is an ongoing process, which regular verifications and follow-up to ensure information is still accurate and current, if it is subject to change, like COIs or background check results. By including appropriate language in your contracts with service providers, you can make clear your expectations for compliance across your network and launch a program that underscores your desire to be a reputable, consistent and valued partner who is concerned about protecting its customers, reputation and overall business.

Contents are provided for information purposes only and should not be construed as legal advice. Users are reminded to seek legal counsel with respect to their obligations and use of PlusOne Solutions services.

About PlusOne Solutions

PlusOne Solutions has been an industry leader in the risk management field by specializing in compliance programs that meet the complex challenges of geographically dispersed contractors, vendors, and employee networks. PlusOne Solutions protects companies from possible financial, legal, and reputational risks associated with contractor and vendor relationships while creating safer work environments. To learn more, visit https://www.PlusOneSolutions.net.