Advantages. Time and money are the most valuable resources, so when companies find ways to save both, they act. Contract workers, after all, are flexible, allowing companies to fill their talent needs as their needs fluctuate. Why consider the long-term commitment of W-2 employees when a project requires only a few weeks or months of work?
Conveniently, 1099 workers (referring to the tax reporting form for freelancers) can hit the ground running and complete projects quickly in exchange for an agreed-upon compensation rate, which is usually a higher wage per hour or job. However, that premium price pays for convenience: Contractors usually possess the exact skills and training needed to complete the job quickly.
Contractors also require less time and fewer resources for filling out and filing federal paperwork, a major benefit for HR. Companies also don’t have to worry about tracking these workers’ hours for overtime pay or investing in a benefits package. Typically, contractors are provided benefits through their staffing agencies or their own providers.
Ultimately, hiring on-demand talent is a great solution for short-term jobs, such as covering employee absences and vacations, filling in for seasonal needs and bridging the gap during staff shortages.
Disadvantages. Given the benefits, employers should also consider the cons to hiring contractors. While they typically don’t need training, there are times when it’s needed — and accompanying considerations. Training, for instance, may raise a red flag and attract an IRS inquiry because training is usually seens as a practice reserved for W-2 employees; a fraud investigation may result.
Morale is another factor that may be negatively impacted. When a contractor feels isolated and unable to receive the kind of support a traditional employer-employee relationship allows, he or she may suffer from low morale. There could be a disconnect when contractors work alongside full-time staff members, knowing that they, the contractors, are not receiving equivalent benefits. Productivity may falter as a result.
If the contractor works remotely, management also loses the ability to oversee operations, making it more difficult to delegate and guide progress. To vet contractors may require research and time, searches for references and the effort of a portfolio review. If organizations need to hire new freelancers on a consistent basis, say, over several months of new projects, vetting may represent a large investment of time.
More and more, we live in a freelance world. What are you doing to prepare for your next temporary employee?
Read the full story at What You Need to Know Before Hiring Independent Contractors