The traditional workforce is changing. More and more people are choosing to become freelancers, and businesses are starting to notice. Hence, hiring independent contractors (ICs) has become increasingly popular among businesses of all sizes.
A recent study from the Bureau of Labor Statistics found that 6.9% to 9.6% of workers in the U.S are now independent contractors. So what is fueling this shift?
There are many benefits to hiring independent contractors, and in this blog post, we will explore the pros and cons of hiring freelancers vs employees. We will also discuss the legal implications of each decision so that you can make the right one for your business:
Who Is an Independent Contractor?
Independent contractors are individuals who provide services to organizations on a contractual basis. These services can range from technical work, such as website design or computer programming, to more traditional labor, such as carpentry or plumbing.
In most cases, independent contractors are self-employed. Hence, they work independently of any one organization. However, some may be employed by companies that provide contract-based services.
I typically have more control over my work than employees do. They are usually free to set their own hours and work schedules. They can also choose which tasks to complete and which projects to take on.
In addition, independent contractors are typically not subject to the same rules and regulations as employees. For instance, they are not bound by the same employee benefits packages or employment laws.
Who Is an Employee?
An employee is an individual who works for another person or company under an employer-employee relationship. This relationship is usually defined by a contract, which outlines the employee’s duties and the employer’s expectations.
Employers have certain responsibilities to their employees under the law. These responsibilities include following employment and labor laws, providing a safe work environment, and ensuring that employees are able to do their job without discrimination.
Employers who fail to meet these obligations can be held liable for any damages that their employees suffer as a result.
Benefits of Hiring an Independent Contractor
Are you wondering whether it’s better to hire an employee or an independent contractor? While employees give you a certain level of stability, there are numerous benefits of working with an independent contractor. These include:
Saves You Cost
One of the primary benefits of hiring independent contractors is that it saves you costs. When you hire an employee, you need to pay for their Social Security and Medicare taxes, unemployment insurance, workers’ compensation insurance, and other benefits.
However, with an independent contractor, you don’t have to worry about any of these costs. No taxes, no benefits, and no insurance. This can save you a significant amount of money, especially if you’re hiring multiple contractors.
Freelancing also means that you don’t have to provide them with any equipment or office space. They’re responsible for their own costs, and they bring their own tools and resources.
Increased Efficiency
Did you know that independent contractors tend to be more efficient than employees? They’re not bogged down by distractions such as office politics and a toxic working environment.
In fact, they have a vested interest in completing projects quickly and efficiently so that they can move on to the next project. They are also highly motivated to get the job done quickly and efficiently in order to maintain a good reputation. Without a good reputation, independent contractors wouldn’t be able to get new clients.
What’s more, most independent contractors usually have a great deal of experience in their field. This means they know how to get the job done right the first time.
Skip the Training and Onboarding Processes
Independent contractors are usually already familiar with the work they’ll be doing. So, when you hire one, you will avoid the time and expense of training and onboarding processes. This means they can get started right away without the need for expensive orientation programs.
But when you hire an employee, you need to factor in the time and cost of training and onboarding. This can take weeks or even months, during which time the employee may not be productive.
Another benefit of hiring independent contractors is that you can avoid the hassle of I-9 compliance. Employees must complete an I-9 form to prove their eligibility to work in the United States.
On the other hand, independent contractors do not have to complete this form. This can save you time and money during the orientation process.
Increased Flexibility
Independent contractors are also usually more flexible than employees. This means that they can often work around your schedule and complete tasks as needed.
For example, if you need someone to work on a project for two weeks and then take a break for two weeks, an independent contractor can often accommodate this request.
In contrast, employees are typically expected to work set hours each week. This can make it difficult to complete projects on time or take breaks when needed.
Overall, independent contractors offer a more flexible option for businesses. This can be beneficial when you need to complete tasks on a tight timeline or have employees who are unavailable.
Freelancers are also ideal for businesses that have a fluctuating workload. For example, if you run a seasonal business or experience peaks and valleys in your work, independent contractors can be a helpful solution.
They can be hired as needed to complete tasks during busy times and then let go when the workload decreases. This flexibility can help you save money and avoid overstaffing your business.
Reduces Your Exposure to Lawsuits
An independent contractor is not an employee. Therefore, you’re not liable for things like sexual harassment or discrimination lawsuits.
You’re also not responsible for providing them with health insurance or other benefits, nor do you have to withhold taxes from their paychecks. Independent contractors are also less likely to sue you than employees because they know that they don’t have the same legal protections.
Of course, you can still be sued by an independent contractor if they feel you’ve wronged them in some way, but the chances are much lower. And, if you do find yourself in court, the contractor will likely lose because they don’t have the same legal protections as employees.
This is a huge benefit for small businesses, which are often the target of these types of lawsuits. By hiring independent contractors, you can reduce your exposure to these lawsuits and save yourself a lot of money in the process.
However, make sure that you have a written contract in place that clearly outlines the expectations and responsibilities of both parties. This will protect you if a contractor does try to sue you.
Minimum Supervision
When you hire an independent contractor, you are hiring someone to complete a specific task or project. You are not responsible for supervising them or managing their time. This can be a huge benefit, especially if you are short-staffed or do not have the time to manage another person.
Additionally, independent contractors tend to be more independent and self-motivated than employees. They don’t need someone looking over their shoulder constantly, and they’re usually pretty good at time management. This can save you a lot of hassle and free up your time to focus on other things.
Contractors also have the advantage of being able to work remotely. This can be a great perk for both you and the contractor. They can save on commuting costs and have a more flexible schedule.
Additionally, you don’t have to provide them with office space or equipment.
It’s Easier to Fire Them
Firing an I-9 employee is harder than firing an independent contractor. The process is more complicated, and you have to go through the hassle of finding a replacement. You will also need to follow all the rules and regulations set by the government.
However, contractors aren’t covered by the same rules and regulations as employees. This means that you can fire them without going through all the hassle.
In fact, you can let them go with just a phone call or email. You don’t have to worry about HR getting involved or any legal repercussions, so it’s much easier and less time-consuming.
Worldwide Reach
When you’re hiring independent contractors, there’s no limit to where you can find the right person for the job. You can post your job on online freelancing platforms like Upwork or Fiverr, or you can reach out to independent contractors directly through their websites or social media channels.
There are also a number of agencies that specialize in connecting businesses with independent contractors. No matter where you look, you’re sure to find a wealth of qualified candidates.
On the other hand, when you’re hiring employees, you’re generally limited to candidates who live in close proximity to your business. This can make it difficult to find the right person for the job, and it can also limit your pool of candidates to a smaller group of people.
Increased Diversity
When you hire employees, you are limited to a smaller pool of job applicants. This can lead to a lack of diversity in your workforce. However, when you hire independent contractors, you have access to a much larger pool of potential workers. This increased diversity can bring new perspectives and ideas to your business.
If you’re interested in hiring an independent contractor, consider using HR software like WorkBright.com to streamline the process.
These software tools offer a simple way to post job listings, screen candidates, and onboard new hires. Plus, they come with a database of pre-vetted independent contractors that you can access with just a few clicks.
Offers Greater Diversity
Independent contractors offer a greater diversity of skills and experience than employees. By hiring independent contractors, you can tap into a larger pool of talent and get the specific skills and experience you need for your project.
For example, let’s say you need a web developer for your new e-commerce site. You could hire an employee who has some experience with web development, but they may not have the specific skills and experience you need.
Alternatively, you could hire an independent contractor who specializes in web development and is experienced in the specific software you’re using. This means that they can hit the ground running and get the job done quickly and efficiently.
You Will Only Pay for the Job Done
One of the benefits of hiring an independent contractor is that you will not have to worry about paying for employee benefits, vacation time, or sick days. So, you will only pay them for the job they’ve done.
If they complete the project ahead of schedule, you save money. And if they need more time than expected, you don’t have to pay them for extra hours.
On the other hand, working with employees means that you will have to pay them even if they are not working on your project. Hiring an independent contractor can be a great way to save money and get the job done efficiently.
Access to a Vast Network of Meaningful Connections
Independent contractors have the opportunity to connect with a vast network of people who can help them grow professionally. They connect with clients, other contractors, and industry experts who can offer valuable insights and advice.
Through this, they have access to a wealth of knowledge and experience that can help them improve their skills. This means that they can provide better services to help you grow your business. They can also tap into this network to help you identify new business opportunities and find the right people to help you achieve your goals.
Now You Know the Benefits of Hiring Independent Contractors
In conclusion, there are many benefits to hiring independent contractors vs employees. They’re easier to fire, they require less supervision, and they can be a great solution for businesses with fluctuating workloads.
However, make sure you weigh your options carefully and consider the pros and cons before making a decision. And, as always, consult with an attorney to make sure you’re in compliance with the law.
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