Acknowledge These Pros & Cons Before You Hire an Independent Contractor
There are many benefits and drawbacks that you must be aware of before you hire an independent contractor.
It's pretty common for employers to require the services of an independent contractor (IC). These include freelancers, consultants, seasonal workers and other temporary professionals.
Trends change now and then, which can sometimes confuse companies about what to choose and should they hire an independent contractor or not. A recent study by the U.S. Bureau of Labor Statistics showed that between 6.9 percent and 9.6 percent of all workers are independent contractors, equivalent to 10.5 million to 15 million workers.
Why Hire an Independent Contractor?
Small business owners may opt to hire ICs to help ease the workload and relieve some pressure and stress.
Independent contractors are individuals whose job tasks are controlled by the individual rather than the employer. Their skillset helps these companies go about work without the need of hiring full-time workers.
Companies that hire an independent contractor reap tremendous benefits and take on sizable risks. Here are the pros and cons you need to consider.
Advantages of Hiring an Independent Contractor
Even though most employers pay ICs more per hour than they would pay their employees to perform the same roles, it may still cost them more if they hire employees.
Hiring employees will mean paying additional expenses, such as health insurance, social security, state unemployment compensation insurance, retirement benefits, and paid leaves.
These types of costs can increase the total payroll and benefits expenses by as much as 20 to 50 percent more per year. Also, you don’t need to worry about buying new equipment, providing office space, travel allowances, and administrative requirements when you hire an independent contractor.
2. Additional Help
Just like regular employees, ICs can provide the workforce a small business or start-up needs to thrive. Small business owners may have a hard time hiring regular employees because of the additional expenses.
ICs have the same skillset that regular employees have, and they are cheaper in the long run. Hence, hiring them can provide additional help and, at the same time, reduced costs.
3. Staffing Flexibility
Working with ICs allows the companies greater flexibility and leeway in hiring and letting go of workers.
Hiring an independent contractor enables you to hire people when you need them the most. You can increase the workload of ICs when you need their services and not hire them when you do not need them.
Hence, the company can’t be sued or face legal trouble that can accompany lay-offs and firings.
4. Fewer Lawsuits
Employers who opt for hiring ICs may reduce their exposure to lawsuits. Employees in the country have a broad range of rights under state and federal laws, and full-time employees often have more privileges and expect more from their employers.
Since ICs are independent and are not connected with the company, they are more flexible in general.
5. Access to Special Skills
When considering to hire an independent contractor, you can hire freelancers with specialized skills. You don’t have to spend ages finding one person, but you can employ ICs until you find your perfect match equipped with the needed skills and expertise.
Also, ICs have higher levels of efficiency quickly. They can work on their own, training them to become the best ones in their career path. Hence, they have higher levels of efficiency.
Employers who work with ICs can seek out the unique skills they need to address specific business needs.
Disadvantages of Hiring Independent Contractors
Since ICs are not tied to the company alone, you can have issues when you hire an independent contractor again.
For instance, you hire an IC for a specific job that runs for about a month. After the project, you want the IC to work for another one, but they may have committed to other companies.
The dreaded hunt starts again. This scenario can impact the quality of work and the overall output of the IC.
2. Lack of Control
One advantage of having your employees is having control over them. When hiring an IC, you don’t have much control over the individual.
They can set their time frame, work environment, and schedule when completing the work. Also, though you have a professional relationship with the IC, your perceived authority and control may be limited.
3. Quality of Work
Since companies hire an independent contractor usually to complete one project, there is a chance they will not put forth their best effort.
Some ICs might think that since it’s a one-time deal, they can just complete the task without worrying because they will never have to work for the same employer again.
Meanwhile, hiring employees can give you authority over their work ethics and quality, pushing them to do their best.
Technically, when a contractor creates something that can be copyrighted while working as an IC for the company, the contractor owns the copyright.
Unless stated otherwise in a legal document like a contract, the company will not own the copyright to the contractor’s project or work.
In the business world, competition is inevitable. Some ICs may work as freelancers for many companies, including your competitors. While this could gain you some intel, it could also lead to a reduction in original content.
6. Limited Training
When you hire an independent contractor, they may need to go through training and skill development, but some of them don’t. When hiring ICs, the opportunities for training are limited. This can increase the risk of a failure in a project.
Hiring employees and Independent contractors can have its pros and cons. It all boils down to choosing which you think will be the best for the company.
Finding the solution for any company needs to be assessed individually until the right formula of staffing model is attained. In the end, you should always make decisions based on what's best for you and your company.
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