Independent contractor jobs are in the limelight of the present-day employment market. It might seem fascinating to hire independent contractors due to the immense benefits it offers such as saving money, enhanced productivity, and greater flexibility. But just like any coin has two sides, hiring independent contractors also has some disadvantages. For instance, to hire an independent contractor, you need to be well-versed in the legal requirements. Apart from that, you might also face some compliance issues. So is it right to hire an independent contractor? Let’s find out!
Who is an independent contractor
“An independent contractor is a person or organization that is self-employed and that does work for another business under a certain contract. Unlike regular employees, they do not work for their employer on regular basis. Instead, they work only when they are asked to. Since they are not employees of a firm, they are not eligible for the benefits that the firm offers.”
According to the Independent Contractor Study, 9% of Washington’s workforce was involved in independent contract work. Independent contracting in the state increased by 15% between 2008 and 2016. With such growing numbers, it becomes necessary to understand what employing independent contractors means.
- In independent contractor work, the contractor makes the expenses for tools and not the organization, unless the organization asks for the use of a specific tool.
- Independent workers have the freedom to work for more than one firm at the same time.
- If you hire an independent contractor, then you need to pay them as per the date and time mentioned in the contract.
- When you hire an independent contractor, you have no control over how the work is done. You can’t direct them to work in a particular way.
- However, you can ask for a certain level of outcome.
- If you want to hire an independent contractor, then make sure you make a legal contract. Both parties are then obliged towards it.
- Independent contractors do not get the company benefits like an employee. They need to make their insurance, medical and retirement plans.
- Employing independent contractors means not giving them a permanent position. Independent contractor jobs are temporary jobs and hence the employer is not responsible for their employment.
To understand it better, let’s do a quick comparison of an independent contractor vs employee contract work.
Independent contractor vs employee contract work
Number of employers
Independent contractors can work for more than one employer at the same time.
An employee of a firm usually has a single employer i.e he works for one firm at one time.
Not fixed. They set their work hours.
Fixed by the Employer.
Place of work
Can work from anywhere they want. For eg; their house or even the mountains.
If not remote work, then employees need to work from the employer’s office.
They are not entitled to any kind of benefits, other than those mentioned in the contract. They are not entitled to worker’s associations and labor laws. However, they have separate laws.
They are entitled to all the company benefits such as insurance, medical coverage, etc. They are entitled to worker’s associations and labor laws.
They work independently.
They work under an employer or a firm.
Work and wages
They do the work in the way they want to. Paid according to contract. They do not receive extra pay for extra work hours.
They work in a manner as directed by the employer. They are covered under federal and state wage laws. They must be paid for overtime.
They must take care of their taxes.
Taxes are paid by the firm.
Can be terminated without any notice.
A notice period is allotted. An employee can be terminated only after working for that particular notice period. Otherwise, the termination will be termed illegal and the employer will face legal consequences.
Hence in the debate of independent contractor vs employee contract work, we have come to the conclusion that both independent contractors vs employees have their own set of advantages and disadvantages. An independent contractor gets greater flexibility, whereas the employee gets the company benefits.
When to hire an independent contract worker
1. Short term project
The employer posts independent contractor jobs when they have some short-term projects. You employ independent contractors when a short project is required to be completed in a short period of time.
2. Non-central work
You hire an independent contractor when the work is not central to your institution. The cleaning work, computer-based work, reception work, and other such kinds of work are central work and require full-time employee engagement.
3. Work that needs minimum supervision
Employing independent contractors works fine for jobs or tasks that don’t need much supervision. Hiring independent contractors mean you are hiring professional workers who need little to no supervision. They are aware of the work they do and follow deadlines.
4. For irregular work
Employing independent contractors is compatible with one-off work or irregular work i.e the work you only need to do a few times. For instance, you don’t need to employ a builder on regular basis. You can call him when you have some work related to construction.
Steps of employing independent contractors
Before you make any final decision, make sure you consider whether an independent contract worker will be a good fit or a full-time regular employee. Ensure whether the project you are employing independent contractors for is a short-term project or not.
Independent workers are good for irregular or one-off work. They are hired temporarily and not for filling a permanent position. Therefore, planning before hiring is a must.
2. Check with legal details
Once you are done planning, the next step in employing independent contractors is to go through with all the legal requirements. You should be well aware of the contractor laws of the country you are hiring an independent worker in.
Talk to the legal branch of your company about independent contract hiring. They will tell you about all the rules and regulations you need to follow before, while, and after recruiting an independent contractor.
3. Process the candidate persona and write a job posting
Before you write a job description for a job posting, imagine the skills and qualities you would like to have in the contractor you hire. Determine the minimum qualifications necessary for the independent contractor jobs that you will hire for.
For instance, if you want to hire a graphic designer, then consider the qualities and skills you expect out of him and then mention them in your job description. A candidate's persona is the most significant part of the job posting. A job posting typically includes:
- Job details
- Required credentials or qualifications and skills
- Length of the job you are posting
- Who an ideal contractor would be
- Company profile
4. Post the job posting
If you are done with the candidate persona, the next thing you must do is make a job posting. A job posting is a marketing advertisement to attract potential candidates. Your job posting should be short but it should also include all key details.
Make sure you post your job on an attractive platform. A good job posting platform will help you hire the best contract worker in the shortest time. AllRemote, one of the fastest-growing communities for remote work, helps you build teams without boundaries, and within days and not months. It allows you to;
- Create your profile, post a job, review candidates, and recruit the best talent from around the world.
For further thought read: Top 13 sites for remote job posting in 2022
5. Compile the applicant list and start screening
The next step towards employing independent contractors is to compile the list of applications you received from the job posting. Make an extensive list of all the candidates with their qualifications.
Then select the most eligible contractors and discard the ones you think are not a proper fit. In some cases, you will find a contractor with suitable qualifications but a relatively lower experience. Make the final decision and start the screening of the ideal candidates.
6. Request quotes from the contractor
After you are done with screening, you should ask for a quote from the contractors. Different contractors will put forth different quotes. Some of them will be higher as compared to others. Make sure you have an idea of the quote required to complete that job. Otherwise, you will fall prey to these contractors. Keep the options that you think are a good fit and eliminate the others.
7. Interview stage
Next comes the interview stage. If you are satisfied with the quote put forth by the contractors, you can call them for an interview. This interview can be conducted either virtually or in the office, at the convenience of both parties. While interviewing, you can also negotiate the price to make a fair deal.
Also Read: How to hire remote workers remotely
8. Make a solid contractor agreement
If you have decided whom you want to go forward with, then the next step in employing independent contractors is formulating a strong contractor agreement. Your contract agreement should contain all the significant details such as:
- The services that are being contracted
- Length of the contract period (start and end dates)
- Terms, conditions, and obligations of the contract
- Confidentiality or non-disclosure terms
- Terms for ownership of the project
- Details relating to the payment and bills
9. Run through the legal team
Make sure you run your contract with your legal team. Be aware of the federal laws for your country as well as of the country you are hiring the independent contractor from. Different countries have different federal laws related to contract-based hiring. In fact, some countries have federal contract payment laws too. You should be careful of the legal terms as otherwise, you might attract a hefty penalty.
10. Termination or extension
If want to terminate a contract with the independent contractor, then we strongly advise you to not do it immediately. Provide a certain period of time to the contractor or maybe a notice too. And if you are impressed and satisfied with the work of the independent contractor, then you can also extend the contract period.
Advantage to hire independent contractors
1. Saves money
Employing independent contractors can save you a lot of money. For instance, you don’t have to pay a contractor a regular salary. You only pay for the work and not for the ideal hours. This is highly useful when you have more irregular work.
- You save up the monthly fixed payment
- You don’t have to provide the medical coverage, insurance, and taxes you would have paid for an employee
- You can exclude them from company well-being programs
2. Greater flexibility
If you hire independent contractors, then you get greater staff flexibility. You can hire as per the specific role. Moreover, the termination policies of contract workers are less rigid than those of employees. By hiring independent contractors, you also save yourself from many legal lawsuits such as layoffs.
Independent contractors are more competitive than regular employees. Independent workers are self-employed. They work on a temporary basis and therefore they provide quality work to attract more employers. This is why the amount of independent contractors has increased. According to the Bureau of Labor Statistics, the U.S department of labor, 6.9% of employment in 2017 comprised independent contractors.
4. Reduced liability
Your liability towards independent contractors is lesser than towards employees. You are not responsible for their unemployment. Neither are you accountable for their losses. This reduces your mental trauma.
5. Enhanced output
An independent contractor proficient in graphic designing will be far better than an employee responsible to produce all types of content for the firm. Therefore, if you hire independent contractors, then the work quality, as well as work quantity increases manifold.