The Benefits of Employee Placement vs. Hiring Contractors
Determining the best type of worker to hire for your business is often easier said than done. This decision depends on several factors such as cost, company culture, desired skills and flexibility. Our recruitment services professionals highlight the differences between hiring full-time employees versus contractors, and which type of employment arrangement is best for your business.
Contractor vs. Employee Classification
An employee is a permanent member of your company who must be treated in accordance with federal and state labor and wage laws. On the other hand, independent contractors operate under a separate business name from your company and perform job functions for you temporarily.
The Internal Revenue Service (IRS) has strict worker guidelines about when someone must be classified as an employee or independent contractor, which are primarily based on the degree of control and independence the worker retains; The three categories the IRS uses to classify these are: behavior, financing and relationship type.
There are also penalties enforced for misclassifying an employee. Misclassification denies basic worker protections such as minimum wage and overtime pay and affects a wide range of workers in the home care, janitorial services, trucking, delivery, construction, personal services, and hospitality and restaurant industries, among others.
Hiring a full-time employee has many advantages. It’s best for employers who want consistent, long-term team members invested in building company culture and achieving your mission. the most significant advantages of hiring employees include:
- Shared company culture and mission
- Long-term commitment from the employee
- Flexibility of workload
- Consistency and control over projects and expectations
Long-term employees may be more willing to exceed expectations and put in extra effort your business will benefit from for years to come. Although they incur the additional expenses of onboarding, training, benefits, etc., they will provide more value to the organization than short-term solutions.
Hiring an independent worker as a contractor has its own set of advantages. This option is best for employers who want highly skilled, short-term team members who can perform without supervision or company-supplied tools. The main advantages of hiring contractors include:
- Short-term commitment
- Advanced specific skill sets
- Minimal supervision
- Lower cost
With contractors, you get what you pay for. Be prepared to pay them a higher wage than you would an employee since they are responsible for paying their own employment tax, income tax and insurance. Higher wages generally yield better project results than attempting to underpay a contractor.
What’s Best for Your Business?
The best type of worker for your business depends on the needs you are trying to fulfill. Ask the question: What level of flexibility, control and time commitment do you need? For many businesses, a hybrid approach is best, hiring a set of full-time employees for recurring tasks and contractors for occasional projects.
At Beene Garter, A Doeren Mayhew Firm, our talent acquisition solutions provide customized recruiting and hiring strategies to make a positive impact on your business. Our recruitment services leverage a national candidate network with a result-focused process. We can help you determine the best candidate match for an open role and make the distinction between employee versus contractor based on your needs.
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