Onboarding is one of the most overlooked—and riskiest—stages in managing a flexible workforce. Even small oversights can lead to compliance issues, delayed start dates, or costly fines later on.
In a recent webinar, AllWork hosted a discussion with John Simpson, our SVP of Human Resources, and Jennifer Daimon, VP of Compliance and In-House Counsel at AccuSourceHR. Together, they shared how HR and operations teams can simplify onboarding while protecting against the most common compliance mistakes.
Where companies go wrong during onboarding
As John explained, many teams still rely on manual, paper-based workflows that create unnecessary risk and frustration.
Some common issues include:
-Limited visibility: Teams can’t easily see where each worker stands in the hiring process.
-Disorganized records: Missing or outdated I-9s and tax forms are a recurring problem.
-Skipped screenings: Some companies still bypass background checks to “speed things up” a little.
-Fragmented systems: Information scattered across platforms leads to delays and errors.
When onboarding is handled through one connected workflow, HR can track progress in real time, reduce paperwork, and bring new workers on board in days instead of weeks.
Worker classification: where risk begins
One of the biggest compliance questions is how to properly classify workers, especially as more companies blend full-time employees and independent contractors.
John reviewed the “ABC” test, a framework used to determine worker status:
-A—Autonomy: How much control does the company have over how the person works?
-B—Business: Is the work outside the company’s main line of business?
-C—Control: Does the person operate an independent business or trade?
Misclassification can trigger audits, back taxes, and retroactive pay. The safest approach is to document the reasoning behind each classification decision before work begins.
Screening and disclosure best practices
Next, Jennifer outlined how the Fair Credit Reporting Act (FCRA) governs background checks for both employees and independent contractors.
“While it may seem that obligations for background screening may only apply to employees,” she said, “unfortunately, they also apply to independent contractors, which makes it very convoluted and confusing.”
Every screening requires clear disclosure, signed authorization, and a defined purpose that fits the nature of the relationship.
She also walked through examples of local rules that can make compliance even more complex:
-California requires fresh consent for each background check (i.e., no “evergreen” approvals).
-Los Angeles and San Francisco extend employment screening laws to contractors.
-New York City mandates specific forms during the pre-adverse action process.In turn, it’s key for organizations to understand where workers live and tailor disclosures accordingly.
John reinforced a few simple best practices: “Make sure you have the necessary documentation and signatures, make sure you understand what is legally permissible to be asked for, and know what to do if something comes up on the background check.”
What happens if compliance slips
FCRA violations and misclassification errors can lead to significant penalties, from five-figure fines to large class-action settlements.
Even one missed step in the adverse action process can trigger a claim, the panelists explained.
As John put it, “Plan for it up front so you can save a lot of time later.”
What frustrates workers most
For most workers, the frustration sheers from confusion. For instance, when documents live in multiple systems and steps aren’t clear, onboarding simply becomes slow and frustrating.
A single, tech-enabled process eliminates that friction, letting workers complete all of this work in one place and start contributing faster.
Key takeaways
- Automate and centralize onboarding steps.
- Review worker classification early to prevent rework later.
- Follow disclosure and screening laws for both W-2s and 1099s.
- Track state and local variations in background-check rules.
- Keep records for the required retention period.
Learn more
Go here to watch the full conversation between John and Jennifer. For a closer look at how modern onboarding tools support compliance for flexible and contingent teams, request a demo of AllWork here.