It has become increasingly common for companies to hire contingent workers to fill staffing needs and help with short-term or high-skill projects. But what exactly are contingent workers, and how can employers navigate the sometimes-confusing rules and regulations associated with them?
Our team explains everything you need to know about contingent workers below.
What is a Contingent Worker?
A contingent worker is someone who temporarily works for a company. The time period usually depends on how long it takes to complete a certain project, it can be as short as a few days or as long as several months. Since they only work as needed for a specific timeframe, they are not considered any employee of the company. The relationship between a company and the contingent worker is outlined in a legal contract that defines the scope and duration of their obligations.
The biggest difference between a contingent worker and an employee is the nature of the working relationship. (We briefly discuss this in our most recent posts, check out our content related to virtual assistants here:
5 Benefits of Hiring a Virtual Assistant for Your Business
Important Tax Rules to Consider When Hiring a Virtual Assistant
Contingent workers don’t share the same employer/employee relationship that traditional employees do. Traditional employees are subject to the employers’ rules in the workplace and are expected to follow certain requirements, such as conduct and their availability. In return, employees receive a salary or wage and, in most cases, benefits like healthcare and retirement.
For employers, the employer/employee relationship provides them with reliable, consistent labor to maintain optimal business functions. In exchange for the profits this relationship makes possible, they’re expected (and in some cases required by law) to provide for their employees through wages, paid time off (PTO), payroll tax contributions, healthcare, and other benefits.
While the relationship between a contingent worker and client may come with its own expectations, they are usually much more flexible.
What are some Types of Contingent Workers?
“Contingent workers” is an umbrella term that covers the many different types of workers.
Contractors conduct work for their clients for a set amount of time or for the duration of the project. The key difference between an employee and contractor is that a client has no legal right to require how, when or where the work is performed, whereas an employer can require their employees to work at an office in person.
While this is the main difference between the two, there are other differences as well. Notably, all contractors are contingent workers, but only some contingent workers are contractors.
Temporary, Leased, and On-Call Workers
Temporary workers (temp workers) work for their employers for a short period of time and is most commonly seen during the holiday season. The temporary worker arrangement shares many similarities with the traditional employer/employee relationship than contractors. They may be required by their employer to do their work in person, wear a uniform, or work a full hour shift.
Since temp workers usually aren’t employees of the company they work for, they work for they work for the employment agency that arranges their short-term assignment.
Leased workers are similar to temporary workers in that they are short term employees whose labor is leaded for their primary employer to different clients for short term contracts.
On call workers are workers who contract with clients to be on call for certain types of work. The on-call workers availability and time commitment are usually negotiated in advance.
Why hire a contingent worker?
But because of the short-term nature of the arrangement and savings on benefits administration, contingent workers can end up being more affordable than traditional, full-time employees.
Many contingent workers are highly skilled and typically work independently because of their passion for what they do.
On boarding new employees can take up a lot of your time. Because contingent workers are quick to adapt to their client’s needs, they generally don’t require near as much hand holding or paperwork.
Why is a person’s employment type important?
It’s imperative that your company appropriately designated workers as employees or contractors to avoid legal and financial liability. Remember that employees are owned certain privileges that contractors don’t qualify for, such as minimum wage and overtime. On the other hand, contingent workers waive their rights in order to set their own hours and pay rate.
When you as a business owner, employer, and/or contingent worker have questions pertaining to your workforce, taxes, and other operations, it’s important that you don’t base your decision on the results of an online search. Remember that everyone’s situation is unique, and you want to be equipped with the right information to ensure you don’t run into legal or financial trouble down the road.
Whether you are looking to hire a contingent worker for your company or you are an independent contractor seeking personalized guidance, our team of business experts at MCDA CCG are happy to answer any of your questions along the way. It doesn’t take more than a simple phone call, email, or even a quick comment/message on our social media accounts (@mcdaccginc) to get you in touch with one of our friendly advisors. Reach out today!
Other resources you may like:
What Does Business Insurance Cover?
What Are Loan Options for Self-Employed Workers?
4 Things to Look for in Your Business Financial Advisor
Why Every Business Needs an HR Compliance Audit
Dos And Don’ts: Business Budgeting Tips For 2022
Common Payroll Mistakes for Your Small Business To Avoid