Why Enterprises Still Can't Scale Flexible Talent

Jeff Nugent shares insights on independent contractor compliance and why it's the single biggest obstacle to enterprise flexible talent adoption — drawing on 30 years of building compliance solutions in the workforce industry.

IC Compliance — The 900-Pound Gorilla

Every conversation about the future of work eventually hits the same wall: compliance. Enterprise buyers want to engage freelancers, independent contractors, and flexible talent at scale. The platforms exist. The talent exists. But independent contractor compliance remains the 900-pound gorilla that prevents adoption from moving past the pilot stage.

Jeff Nugent has watched this play out across three decades and three companies. He started in IT staffing in the mid-90s — before Google, before job boards, when paper resumes were wheeled on carts between desks. He built one of the first MSP/VMS solutions, then founded one of the first employer of record companies, which merged into People 2.0 and became the world's largest EOR. Now his third venture, Independently, tackles what he calls the linchpin of the entire flexible talent ecosystem.

"This is the 900-pound gorilla that's really preventing this future of work that you talk about, I talk about, we all talk about. The platforms are coming into the market, but they're stubbing their toes." — Jeff Nugent

Taxation Drives Everything: Why IC Laws Aren't Going Away

The most common mistake platforms and buyers make is treating compliance as friction to be minimized. Jeff frames it differently — employment and tax law exist for a very specific reason, and understanding that reason is the key to working within it instead of around it.

Countries use employers as tax collectors. It's far easier for a government to mandate payroll deductions from thousands of employers than to chase hundreds of millions of individual workers. When someone works as an independent contractor, they're responsible for their own taxes — which is exactly why governments scrutinize these relationships so closely.

"Taxation, taxation, taxation. Countries use employers as tax collectors. It's hard for a country to come to you as an individual and hunt down hundreds of millions of people individually. So they go after employers to collect taxes." — Jeff Nugent

The consequence is simple: if an IC relationship is misclassified, it defaults back to employment — and all the liabilities for overtime, severance, and payroll remittances fall on the enterprise or the platform that engaged the worker. Legal liability goes after the deepest pockets first, then works down the supply chain.

Why Freelance Platforms Failed the Enterprise

Jeff watched the first wave of freelance platforms pour VC money into technology without listening to how enterprise buyers actually operate. The pattern was consistent: build flashy tech, claim you're "disrupting staffing," ignore the 20-year-old ERP ecosystem that enterprises have already built and integrated into their financial and HR systems.

"They built all these cool pieces of technology, but they didn't listen to how the clients currently do it, especially on an enterprise level. They just thought, that's friction, right? Let's ignore them too." — Jeff Nugent

The result? Platforms get in through the back door on a credit card, place 10 freelancers, and then hit a wall when they try to scale to 1,000. The enterprise compliance, legal, and procurement teams shut it down. Upwork eventually acknowledged this by partnering with a VMS company to plug into the existing ecosystem — the opposite of the disruption thesis they started with.

AI Creates More Flexible Talent Demand, Not Less

The counterintuitive insight from this conversation: AI isn't replacing the need for flexible talent — it's accelerating it. As companies cut full-time employees and expect AI agents to fill in, they quickly discover that agents need human orchestration. Those same workers get hired back, but now as freelancers and fractional contributors.

"When you got a floor at a company and you think you're going to get a bunch of AI agents doing all that work — you're dreaming in technicolor. You've cut all these people and you need those 10 people back to guide the AI. So instead of giving them full-time employment, you're hiring them back in as flexible talent." — Jeff Nugent

This shift makes compliance even more critical. If enterprises are re-engaging workers as independent contractors instead of employees, they need verification that those relationships are properly structured — or they face the same legal exposure Jeff described earlier, now at much larger scale.

The Bottom Line

Independent contractor compliance isn't a problem you can engineer around. It's the foundational layer that either enables or blocks everything the flexible talent ecosystem is trying to build. Jeff's model at Independently — acting as a trusted, standardized verification engine across platforms, EORs, and staffing firms — gives enterprise buyers the confidence to scale. Without that trust, the chair stays on the hose.

The companies that figure out compliance as a feature, not friction, are the ones that will actually deliver on the promise of flexible talent at enterprise scale.

About Jeff Nugent

Jeff Nugent is a three-time entrepreneur in the workforce compliance space. He founded one of the first employer of record companies, merged it into People 2.0 (the world's largest EOR), and now leads Independently — the compliance verification standard for independent contractors working through freelance platforms, staffing firms, and direct enterprise engagements.

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This article was adapted from the Human Cloud Podcast. Subscribe wherever you get your podcasts.