What are the Pros and Cons to a Contingent Workforce for Small Business?

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What are the benefits and drawbacks of hiring a contingent workforce? We explore what small businesses need to consider when hiring contingent workers.

Need some extra help on a big project? Looking for someone to lighten the load? A contingent workforce is a cost-effective way for small businesses to make the most of their manpower.

What is considered a Contingent Worker?

A contingent worker is a temporary outsourced employee,  such as a freelancer, contractor, or consultant. They can be an excellent resource for small businesses who need to fill in the gaps of their team’s skill set. Not all temporary workers are contingent, though;  seasonal workers, for instance, are official employees.

If you’re not sure whether or not a worker is contingent, play it safe by reading the Employment Law Guide or talk to an employment lawyer.

Is an Intern a Contingent Worker?

Typically, yes. Because an intern’s employment with a business ends at a predetermined time, they’re considered part of a contingent workforce. This isn’t always the case, though. Depending on the hiring agreements, some interns will cross the line from contract worker to employee. Review their contract carefully if there’s a grey area.

What Are the Benefits to Hiring Contingent Workers?

Contingent workers offer small businesses a few key benefits. The biggest benefit of contingent workers is financial– because they’re not official employees, you don’t have to worry about benefits, vacation pay, and overtime. You’re only on the hook for the agreed pay rate. You’ll get the perks of an official employee without the piles of paperwork.

Contingent workers also provide valuable expertise. Let’s say you’re revamping your website, but no one in your staff has the right skills to get the job done. You have two choices: hire a full-time web developer or hand the project off to a freelancer. When you opt for someone in the contingent workforce, the job gets done by a seasoned pro.

Another major benefit of a contingent workforce is flexibility. Temporary workers are there to suit your needs, whether you want help with a one-time project or need them to stick around for a few months. Once the terms you’ve agreed to are up, your professional obligation to this person is over. You can choose to work with them again–or you can end your business relationship right then and there.  It’s up to you (and to them) if you’ll use their services in the future.

What Are the Drawbacks of Hiring Contingent Workers?

One word: legality. The difference between a contingent workforce and a traditional one isn’t always clear. Before you bring in an outside worker, get familiar with the different employment types to avoid any legal dilemmas. Take all necessary precautions to ensure hiring compliance. Draft a contract that provides a clear, accurate job description, note their exemption status, and outline a pay rate and a time frame. The more detailed you can be, the better.

Keep control in mind, too. Sure, you’re paying this person, but they’re not a formal employee. You determine what they do, but you have no say in how they do it. Contingent workers can’t be supervised the way employees can. When you rely on a contingent workforce, you lose a degree of authority. To minimize the risk, look for workers with great testimonials and a large portfolio.

Want to learn more about the pros and cons of contingent workers? Read more here.

This article is intended only for informational purposes. It is not a substitute for legal consultation. While we attempt to keep the information covered timely and accurate, laws and regulations are subject to change.

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