What Is Contingent Employment?

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Nov 9, 2017

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In today’s ODE (On-Demand Economy) You may have heard someone use the term agile workforce or contractor at work or seen it in a job posting. While in some ways there is a similarity to a contractor in the telecommunication field, in the corporate world it refers to temporary employees. Just like a subcontractor may be hired to complete a maintenance or repair problems, these temporary employees are commonly hired to complete a specific project. It is also known as contingent work.

What Is Contingent Employment? And Who Are Contingent Workers?

Known as independent contractors, contractors, temporary workers, freelancers or consultants, the contingent workforce differs from regular employees. They are not true employees of a company. Often hired through staffing agencies, they can be hired directly by the company.

In most cases these workers will be in customer service or operations, which are the areas where most of the volatility will be. Temps can be hired in other areas though. A marketing department may hire a freelance writer to help during a launch or a new product. Likewise, web designers may be hired on a contingent basis to redesign the website or employee intranet.

Hire contingent workforce - What is contingent employment

Hiring Contingent Workers Has Benefits

Despite some disadvantages, both the worker and the company benefit from temporary employment. Not only does it allow for more freedoms for the worker, but also it provides financial benefits for the employer. Plus, the nature of the employment allows for flexibility on both sides.

Advantages for Businesses

There are varieties of reasons why a company may hire contract workers. Since contingent workers are not permanent, the workforce can rise and fall according to the workload. Hiring a contingent worker is also a tax deduction as it is considered an expense, especially if a staffing firm manages the workers. In addition, employers do not have to pay payroll taxes, unemployment taxes or benefits for these workers, which can save the business money.

Advantages for Workers

For an employee working as a temporary employee allows for a better work-life balance for some. Many positions allow for remote work and flexible hours. Furthermore, because the nature of the work is temporary, the person can move from job to job without it looking bad on a resume. It can also give someone the opportunity to work in a variety of industries and gain valuable skills that can turn into a permanent position in the future.

Employment Considerations

It is important for a business and its human resources department to correctly classify the contingent worker, even if the worker is not full time. According to guidelines by the Department of Labor, an independent contractor is different than a temporary employee. While the business does not have to offer benefits to a temp worker, they do have follow other employment laws that pertain to permanent employees, such as overtime pay and minimum wage.

On the other hand, an independent contractor can be paid with one lump sum at the end of the project or in equal payments. A business can’t be held to the same requirements as the independent contractor is his/her own employer.

The difference in the two distinctions lies in how the worker is treated. A temporary employee may have set hours and duties and answer to a supervisor, working in a similar fashion to an employee. Whereas an independent contractor may set his/her own hours and does not have a “boss” who oversees the work.

Should I Hire a Contingent Employee?

The benefits and disadvantages of this type of employment need to be examined carefully. What works for one business may not work as well for another. If you have a project or need to ramp up a workforce for a promotion, then, temporary help may be right for you. Plus, if you have regular rises and falls in demand, these type of workers may be an advantage. It may be just the right choice for you to take.

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