A small, one-person business needs a graphic designer to create marketing materials for an event. A retail store needs 12 additional sales clerks in November and December to cover the holiday season. A manufacturing firm contracts an engineering firm to streamline its processes.
There may be times when you need extra help for a period of time. It’s not enough work to hire more full-time long-term employees. So, you turn to contingent workers—people you bring in to fill that need.
For small projects, you simply contact a temporary employment agency and get someone for a few days or weeks. But if you’re going to use contingent workers on a wider, longer-term basis, you need a strategy.
What is a Contingent Worker?
Contingent workers are not your employees. You have a contract with them or their employer, and you pay for the work specified in that contract. You do not pay wages, benefits, or other employee compensation. Contingent workers may work remotely on their own or side-by-side with your employees for set amounts of time and hours.
Staffing Industry Analysts estimated there were nearly 52 million contingent workers in 2020—about 35 percent of the workforce.
They’re often found through staffing agencies like Insight Global! However, businesses also find contingent workers through job boards, review sites, and freelance-specific sites.
Who They Are
Contingent workers are used across most industries, professions, and levels. They can include independent contractors (also referred to as 1099 workers), freelancers, consultants, temporary or seasonal workers, and gig workers. Contingent workers can pack swag bags for your upcoming conference or provide advice to your executive team as a consultant.
For small businesses, contingent workers can provide skills and functions that you don’t have in-house. You might occasionally use a content writer or software developer to maintain your online presence. If you’re a college with a limited budget, you hire independent adjunct instructors to cover some subjects.
Stay-at-home parents, college students, retirees (sometimes they return to their old company!), and others often take part-time work as contingent workers for supplemental income and flexible schedules, although the majority of contingent workers work over 35 hours per week.
How They Get Paid
Consulting firms, employment agencies, or other businesses can supply contingent workers. You pay the business, and the business pays the workers. (That’s how it works in Insight Global’s case.)
Other contingent workers are self-employed business owners or individuals whom you pay directly. For those that you pay directly, you will need them to complete a W-9 form (Request for Taxpayer Identification Number and Certification) and send them a 1099-NEC form (Nonemployee Compensation) after the end of the year.
Why Should I Use Contingent Workers?
Within some companies, contingent workers represent as much as half of the workforce. But is this a good idea for you?
Why would you use contingent workers instead of hiring more regular employees?
- You’re a small business with few employees. There’s not enough work or budget for employees, and you only need help with occasional projects.
- You can potentially save money. You pay only for the workers’ services, not ongoing salaries, benefits, taxes, and other employment-related costs.
- Contingent workers can fill knowledge gaps with their expertise or stand in for employees on leave or vacation.
- You gain the flexibility to adjust your workforce to match business trends and workflow.
- Remote contingent work can expand your candidate pool beyond your immediate area.
- A temp-to-hire arrangement lets you test candidates as contingent workers. You can later decide whether to hire them as employees.
The world of contingent workers is not perfect.
- You don’t always have the same control you’d have over employees. Some contingent workers—depending on the contract—work their own hours and deliver projects to you based on that timeline.
- A contingent worker you want may not be available right away because they’re working other jobs.
- Contingent workers may need access to confidential information or high-security areas. (However, quality staffing agencies have a roster of workers who have these experiences and clearances.)
- It may be difficult for some contingent workers to fit in with your team culture. This is particularly a concern if they are temporary or your employees are reluctant to include the contingent workers. This may disrupt important, carefully built connections among team members.
- Employees may feel that they are losing opportunities that contingent workers are filling.
Planning and Strategy for Contingent Workers
So, is this a good idea for you? As with any important business decision, using contingent workers as part of your workforce requires a strategy and detailed planning. This will help you:
- Base your decisions on overall organizational and departmental goals
- Anticipate the number of people you’ll need and when you’ll need them
- Ensure you comply with applicable laws and regulations
- Establish and maintain consistent policies and procedures
Have A Team Approach
Create a team to develop your contingent workforce strategy and plan. Seek input from human resources, IT, security, finance, legal, and hiring management to address all concerns and risks. Decide which functions are suitable for contingent workers and which you should keep in-house.
Some questions you may want clarity on include:
- What information, facilities, systems, and equipment are contingent workers allowed to access?
- Should you require background checks?
- How should you track their work?
- Where should they work?
How do you ensure compliance with applicable laws and regulations? The IRS requires a strict distinction between employees and contingent workers. Let your legal advisors guide you on this.
Plan Ahead for Business Needs
Analyze past performance and review your business cycle and objectives. Are you planning to expand your business? Does your sales volume increase during the summer or holidays? Are you taking on new projects requiring special expertise? Include roles for contingent workers, as needed, in these plans.
Contracts and Agreements
Your relationship with contingent workers is governed by contracts. Carefully review all contracts in detail with the workers or the companies that employ them. Make sure all parties fully understand and are satisfied with the scope of work, requirements, and payment arrangements.
Supplement Your Workforce With Contingent Workers
The flexibility and relatively low cost of using contingent workers can address several business issues. By planning and keeping your team informed, you will have a program that contributes to your business goals and success.
If you have hiring needs on a temporary basis, let us know! Last year, we placed over 50,000 consultants at thousands of companies. We’re here to make hiring easy.
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Whether you need one or dozens of contingent workers, we can help. Questions? Call us toll-free: 855-485-8853