Contractor or Employee?
June 15, 2015
Today many businesses and workers are seriously considering their options – whether to hire an employee, and in the case of a worker, whether to be one.
Since the recession of 2008-2009, hiring has been slow to return to normal rates and many former employees were forced to find creative ways to make a living.
As the economy begins to return to normal, it’s time to look at the advantages of contractors vs. employees, and vice versa.
Three Reasons You Should Use a Contractor
Cost Savings
An employee needs to be paid every pay period and while their hourly rate may be lower, their total cost will definitely be higher. Employees not only require a regular hourly rate, they also expect a certain number of hours each week. A contractor normally has a variety of clients and isn’t expecting to be kept busy by just one employer.
Control
Let’s be honest, it can be very difficult to let go of an under-performing employee. Even if you know they haven’t lived up to the job, it can be emotionally challenging and bad for morale to let someone go. A contractor isn’t usually expecting to have a long term job and isn’t normally completely reliant upon your business for their income.
Also, if you need a specific task completed, especially one that requires a special skill or involves lots of repetitive work, a temp employee, or a contractor, can be a great solution.
Legal
Employees are subject to lots of protections that aren’t required of a sub-contractor, including wages laws, extensive anti-discrimination rights, and family leave.
Three Reasons You Should Hire an Employee
Control
An employee is normally more dedicated to your business than a contractor because they have a long term commitment. You can also assign an employee a much wider array of tasks (think of the old “other duties as assigned” clause) because you normally have a full eight-hour day to fill. An employee tends to be more flexible and more diverse than a contractor.
Loss of Talent
Some contractors stay for the long term but they are more likely to seek another full-time job or a different, better-paying contract elsewhere. If you have invested in training someone you want to make sure they stick around. One way to handle this is to work with a temp agency where you can start a new worker as a contractor but have an agreement where they will be offered employment if they are retained for 60 or 90 days.
Legal
Most state and federal agencies look very closely at contractors vs. employees to make sure you aren’t attempting to avoid certain employer responsibilities like taxes or benefits. You have to be sure that your workers are meeting state and federal law that apply to the employee-employer relationship.
There are many good and valid reasons to hire an employee, full or part time. There are just as many good reasons to bring in contractors or temporary workers. The important thing is to consider your options and make the decision that best supports your business needs.
