Contractor or Employee: Determining the Right Worker Mix for Recruiters

The workforce of many companies today consist of a mix of full-time and contract workers. When considering whether your recruitment strategy should include independent contractors or employees, there are many rules and regulations to take into account as well as practical applications.

Employees vs. Independent Contractors

Employees work for a single employer, who can dictate how, where, and when they work. Employees are entitled to company benefits such as 401(k) matching, health insurance, and paid time off. They are also eligible for legal benefits like Unemployment insurance and Workers’ Compensation.

Independent contractors, on the other hand, may work with multiple clients and have the right to decide when, where and how they complete the work outlined in their contract. In general, they provide their own tools and equipment needed for work. They are not entitled to company legal benefits and are responsible for paying both the individual and employer sides of taxes (FICA).

Which to Consider for your Recruiting Strategy

1. Consider what type of work you want done

Employees are best suited for ongoing business needs whereas independent contractors are helpful for filling project-based needs. For example, work or services that are a core competency of your business should probably be filled by employees. Or if there is a need for more work that internal employees are already doing, a new employee should fill that gap. However, if the work you need done is a project that can be defined as a series of deliverables, independent contractors are a great option. This type of work should require a specialized skill set that isn’t part of your company’s core employee base.

Check out: Independent Contractor vs Employee: Which Should I Hire?

2. Think about the type of skills you need

Independent contractors have expertise in all sorts of industries from marketing and graphic design to IT and management consulting. If you need quick access to specialized expertise, independent contractors are often more cost-and resource-efficient than hiring an employee. If you need more people to perform services that define your business or brand, you’re better off hiring a full-time employee. From a legal perspective, this will help you mitigate the risk of worker misclassification.

Check out: 6 Legal Rights of 1099 Contractors

3. Decide how much oversight the work requires

Control is an important factor to keep in mind when deciding whether or not to hire an independent contractor. Employees are typically trained on their job duties and a manager oversees and evaluates their work. But independent contractors come with their own expertise and training—that’s the reason you’re hiring them, after all. Independents operate as their own business entity, so it’s easiest to imagine working with them as a business-to-business relationship. Independent contractors are free to determine when, where, and how they work unless otherwise specified in their contract. While they will be working hand-in-hand with a project team, the level of oversight is much less than with that of an employee.

Check out: 5 Reasons to Hire Independent Contractors