In the next
three posts, all aspects of freelancers, also known as independent contractors
and contract workers, will be explored. From the pros and cons of hiring them,
to the legal aspects, as well as what a freelancer should understand about
their own employment.
@photoExpress.com |
Pro’s
At a time
when companies are looking to get as much out of each dollar as possible,
hiring freelance workers can be the answer. While contract workers often make
more per hour than normal employees, there are less additional expenses. No
Medicare taxes, social security, unemployment insurance, or worker’s
compensation apply. Also, there is
normally less training needed when hiring a freelancer because they are already
well versed in their field. They start doing actual work much quicker, and therefore
start adding to the bottom line quicker.
When hiring
a traditional employee, a company is limited geographically. When hiring a
freelancer, the applicant pool is unlimited. Employers have access to candidates
not just all over the country, but all over the world. For a company located in
a remote area, hiring an employee online to telecommute can be more cost
effective than moving a qualified individual to the area.
Using
contract employees has flexibility that is not possible with full time
employees. They can be hired on a project-by-project basis, and it is possible
to afford different people for different projects. There are also no concerns
over layoffs and terminations.
The Human
Resource aspects of independent contractors are simple. Because they are
considered business entities instead of employees, they do not have the same
rights. There is no minimum wage or overtime. Instead there is an agreed upon
fee for service. Freelancers do not receive protection from workplace
discrimination. They are not eligible for typical benefits available to
employees such as FMLA, workman’s compensation, 401 K, or health insurance.
While there is a contract between the employer and the freelancer for payment,
the freelancer cannot sue for wrongful termination.
Con’s
Before
deciding to abandon the notion of ever hiring another traditional employee
again, it is important to realize that there are drawbacks to employing
freelance workers.
The nature
of hiring independent contractors is that they need minimal supervision. That
also means that the employer has less control. To be considered a freelancer by
the government, there must be limited management. Therefore, the worker has
much more latitude to complete the job in the way that they choose, which may
differ from the way the employer would prefer.
In many
companies, the concept of “team” is important. It binds the employees together
and creates a collaborative atmosphere. When using freelance workers, it can be
much harder to achieve this environment. If there is a mix of both types of
employees, there can be resentment from both sides. These issues may arise
quickly when there is a continual in-and-out of new contractors.
While the
use of freelancers provides a large pool of workers to choose from, it also
means that the actual level of workmanship can vary greatly. One person may
turn out work quickly and efficiently with few mistakes, while another may show
less professionalism, drag their feet turning in projects, and produce sloppy
work. Because of this, many companies work hard to find a few good contractors
they can count on to meet their needs. Unfortunately, weeding out the ones that
are not a good fit can cost time and money.
Using freelancers
is often a quick way to get flagged for an audit from various government
agencies. Different agencies have different rules. In the following post the
legal aspects of who is considered an employee and who is considered an
independent contractor will be surveyed.
Sources:
Global Business Survey 2012. (n.d.) Elance. Retrieved March 31, 2013 from https://www.elance.com/q/global-business-survey
Global Business Survey 2012. (n.d.) Elance. Retrieved March 31, 2013 from https://www.elance.com/q/global-business-survey
Fishman, J.D. Stephen. (n.d.) Pros and Cons of Hiring Independent
Contractors. NOLO Law for All. Retrieved March 31, 2013 from http://www.nolo.com/legal-encyclopedia/pros-cons-hiring-independent-contractors-30053.html
Independent Contractor or Employee: How Government Agencies
Make the Call. (n.d.) NOLO Law for All.
Retrieved March 31, 2013 from http://www.nolo.com/legal-encyclopedia/independent-contractor-or-employee-government-decision-29681.html
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