It is prudent to differentiate between independent contractors (ICs) and contingent works (CWs). ICs are hired to perform tasks that are not within the control of those hiring, while CWs are those whose services are leased from a third party that retains them as employees (Slinde Nelson Stanford, 2017). An advantage of hiring ICs is expert services in specifically challenging jobs. ICs have experience in their fields of work and do not require further training that would otherwise cost time and money. However, a drawback in using ICs is the loss of control over operations since ICs cannot be micromanaged. The advantage of CWs is that employers can staff them as regularly as required by the business. However, since CWs are often used as part of routine staff, it poses great risk since they may later on compromise the confidentiality of the business.
ICs offer high flexibility on projects. Employers are allowed more slack especially when there is fluctuating workload. They allow producers to respond fast and cost-effectively to changes in demand and supply. In terms of efficiency, ICs often have specialized expertise in their particular jobs. Certain critical functions and final products require more collaboration, time, and money to undertake. Thus, it is more efficient to contract ICs to undertake such. CWs are also very resourceful as temporary staff during peak periods of demand. By working directly under the employer, they increase productivity and efficiency all at once.
ICs are favorable to many employers because they save on costs. Employees are often expensive to hire, especially on a permanent basis. Employees may require office space, equipment, insurance compensation, social security and Medicare taxes, among others, ICs are exempted from such expenses that increase the payroll by up to 30 percent (Forbes, 2006).
The use of ICs reduces employers’ exposure to legal issues. Several rights of permanent employees, such as minimum wage and unionization, do not cover them. Employers can utilize them as they see fit. For CWs, apart from outright violation of personal rights, employers are not legally exposed since CWs are contracted by the third party.
- Forbes. (2006). Pros and Cons of Hiring Independent Contractors. Forbes.com. Retrieved from https://www.forbes.com/2006/10/10/contractor-IRS-union-ent-law-cx_nl_1011nolo.html
- Slinde Nelson Stanford. (2017). The Difference Between Independent Contractors and Employees. Slinde Nelson Stanford. Retrieved from http://www.slindenelson.com/Articles/Know-the-Difference-Between-Independent-Contractors-and-Employees.shtml