It’s the age-old question. Should a hiring manager employ independent contractors or permanent staff members? The answer may not be as simple as you think.
Independent Contractors and You
Independent contractors seem like a win-win situation for the harried hiring manager. In principle, independent contractors are small businesses and individuals that are hired for a specific length of time to perform a task. Independent contractors are invaluable when your company is tasked with a certain project that’s out of the company’s general purview, and you need to get it done right away. In that instance, you can hire an independent contractor for the duration of the project and when it’s done, simply terminate the contract.
This may seem easier than hiring a full-time employee for a temporary project (even using our job portal), and it undoubtedly is. Generally, hiring managers don’t need to worry about benefits or sick time when using an independent contractor. This factor alone can save a company thousands of dollars. Paperwork is far less stringent with an independent contractor, and so is the legal liability.
When to Avoid Independent Contractors
With advantages such as those listed above, it’s not surprising that hiring independent contractors is becoming more popular. Companies relying mostly on independent contractors seem to be cropping up all over the place. However, there has been some abuse regarding the “independent contractor” term, and some states are starting to crack down on those abusing it. Here are some situations in which you want to avoid hiring an independent contractor:
1. You Need Control Over the New Hire’s Schedule
Independent contractors should always have control over their own schedules. If you are setting the hours in which a new hire works, he or she should always be considered an employee.
For example, you hire a worker to come to the office and clean out old paperwork. If the worker is an independent contractor, he or she will suggest a time to come in and do the work. The hiring manager will also need to work with the contractor to determine their availability.
Obviously, if you hire an employee, you will have control over their schedule. You can ask an employee to come in at 6 a.m. to clean out the paperwork, or 8 a.m. or whenever you want. This type of flexibility for the employer is a good reason to hire a permanent employee for a long-term position instead of choosing an independent contractor.
Now, can you hire an independent contractor and then insist that they show up at a certain time for the duration of the contract? Sure, but they may have grounds for suing your company for unpaid benefits if the contractor claims that they are actually an employee.
2. Your Core Business Would Depend on the Contractor
If your core business is making widgets, and you hire an individual for the sole purpose of making said widgets, that person should be an employee. Not only is this good common sense, but it is also the law in California, which is cracking down hard on what the state considers to be employees deliberately mislabeled as independent contractors.
What about large companies that rely almost exclusively on independent contractors as their core business? To that, we have a couple of observations.
First, many of these companies haven’t yet made a profit. While this is due to a number of factors, it’s not unreasonable to think that trying to hire independent contractors as employees may be one.
Second, certain companies are also embroiled in a lawsuit with the state of California over hiring independent contractors for their core work. Unprofitable conflicts such as these should be avoided if possible.
3. You Need the Employee Long-Term
Long-term plans are great for hired employees. Some of the most successful hiring managers continually plan paths of achievement for new hires to make sure that they don’t get frustrated and burn out. However, this mode of thinking can only be detrimental when hiring an independent contractor.
Contractors should generally only be considered for short-term projects. Any type of long-term strategizing with them is usually a waste (and may be illegal).
When to Consider Independent Contractors
Of course, there are times when hiring new employees should be avoided, and independent contractors should be hired instead. Here are a few listed below:
1. You have a Limited Headcount and the Job Is Secondary and Short
No hiring manager can hire as many employees as they deem necessary. Instead, the manager must work within the confines of the system. If a job is short-term, an independent contractor will work better for headcount than a new employee will. After all, the independent contractor will be dismissed once the job is completed, while the new employee will remain after the job is over (and may possibly have nothing to do).
2. The Job Would Require Training to Oversee
All employees require managers, especially new hires. If a manager isn’t available that matches the employee’s skill set, then it may be time to consider an independent contractor who shouldn’t need hands-on management.
For example, a hardware store needs to build a new website. No one currently working at the store knows anything about computers, and there is no long-term need for computer knowledge. In this instance, it probably would be advantageous for the company to hire an independent contractor. After all, the new hire would probably be treated as an independent contractor anyway.
The Choice Made Clear: Independent Contractors Versus Employees
The choice between independent contractor and employee seems difficult at first, although it may be easier with our Geographic information system (GIS). However, with a little bit of knowledge regarding the position being filled and some understanding of the law, the answer may become obvious. The independent contractor versus employee question may be stressful for a neophyte hiring manager without the right tools. But it shouldn’t be, and it doesn’t need to be. With this advice, any hiring manager can make the right decision.
If you’re a hiring manager trying to decide whether to hire a full-time employee or an independent contractor, contact us at Mapertunity! Our job search power tool will help you will find the latest job market trends.