That is the highest rate since the government began collecting such data in Small businesses were hit the hardest, but the pandemic affected every company in some way. From the inability to physically occupy office space to the disruption of the supply chain, difficulties emerged.
One way returning companies have found to survive and even flourish in the post-pandemic environment is the use of contingent workers. What is a contingent worker? This is a common question professionals ask when they are considering their employment options. Contingent workers are a group of people who do not have a contract that explicitly defines any long-term employment with a company. Their work is exclusively based on short-term engagements. Employees who do not want to work in a certain company for a long period of time also fall under the category of contingent workers.
Such employees may be defined as freelancers, consultants or independent contractors. They are highly skilled and experts in their areas of specialization. The US government suggests another, broader category of contingent worker as well. This group contains part-time and on-call worker and self-employed people along with the previously mentioned workers. Together, these groups make up nearly a third of the work force.
While the consultants, freelancers and independent workers are often well educated and highly-skilled, the other part of this segment of American workers consists of people who may not have high school diplomas and who exist at the poverty level or below. Contingent workers are not considered employees of a company. They work as freelancers under a contract or on a temporary basis. Unlike permanent employees, their retention depends on the continued existence of the job at hand.
Contingent workers do not receive salaries. Instead, they receive payments or commissions for the work done. They are not liable for benefits like contracted employees and are responsible for their own taxes.
Contingent workers cannot be told how to complete a project, as they work for themselves. Many times, stores hire contingent workers on a seasonal basis, or when they are performing a specific task such as a yearly inventory. These workers receive a fee based on completion of the project or task, or they work on an hourly basis. Companies who want to improve their overall output may hire contingent workers to expand their labor force.
Tapping into the contingent workforce can also help companies save a lot of money on expenses associated with direct exits of contracted workers, training new employees and lost productivity. There are different types of contingent workers best suited to help your business. Depending on the variety of your business needs, you may even find that you could use multiple types in various areas. When it comes to contingent workers, there are three main types:.
Though these contingent workers are employed by a staffing agency, they typically work onsite at their temporary work assignments. These assignments may last anywhere from a few hours to a few months, which means hiring them is a good option for companies that only need additional hands on-deck for a short period of time. For instance, companies that need to scale up for seasonal demand, need a specialized skill for a short-term project, or that have key employees on short-term leave.
Hiring temporary workers fills those gaps without needing to provide benefits, pay employment taxes, or even plan for layoffs when extra workers are no longer needed. Experts in their fields, consultants professionally advise businesses within their area of expertise. Companies most often hire consultants either through consulting firms or as independent contractors. This category includes freelancers, consultants, and gig workers who are not represented or employed by any type of staffing agency or consulting firm.
They are self-employed individuals who offer their services independently to the general public. This means that they hold responsibility for all employment-related taxes and are not eligible for company-provided benefits. It may make sense to hire an independent contractor when your company needs specialized services or expertise for either a short-period of time or regularly, but not at a full-time level.
If a business owner declares someone an independent worker when in fact he should be classified as an employee, the company can be hit with fines and penalties on top of having to pay the taxes owing for that employee. Companies are increasingly beginning to reap the rewards of a contingent workforce by embracing an ever-increasing number of non-permanent workers as part of their growth strategies. But with the advantages come the disadvantages, and these risks must be managed.
A workforce management solution can help. HCMWorks Insights. Posted by Julia Fournier on 14 Jul What Is a Contingent Worker? Contingent Worker versus Employee Contingent workers are not salaried. Advantages of a Contingent Workforce For business owners, the advantages of a contingent workforce are mostly financial. Vestibulum sagittis a lorem nec sodales. The world of work is constantly changing and we try our best to keep you informed about those changes.
Contingent workers are outsourced, non-permanent workers that are commonly referred to as Independent Contractors, contract workers, freelancers, gig workers, consultants, temporary talent or remote workers. And while the language describing contingent workers may vary, their purpose remains the same: they are engaged by an employer on a short-term, long term or on a project-by-project basis. A contingent worker can work on site or remote; however, when the their contract is at an end or the project for which the contingent worker was hired for is complete, the employer has no responsibility to provide continuous work to that worker on a permanent basis — they are not on staff.
When engaging a contingent worker, it's imperative for employers to understand proper contractor classification. Unlike a traditional employer relationship, contingent workers operate as their own businesses and do not work directly for the organization that engaged them to perform the work.
As such, they are not on a salary and are not entitled to benefits or other workers compensation afforded full-time, traditional employees. However, depending on the method in which the contingent worker is engaged to perform the work - whether directly sourced through the company itself or by way of a third party, there exists separate obligations to contingent workers when it comes to payroll.
Contingent worker classification is important! A contingent worker is a highly specialized expert in their field who is typically engaged when an organization has a project or a contingent position that requires a niche skill or a high level of expertise. When completing the project or contract, contingent workers also have more control in how and when they do their work than traditional employees do. If your organization is considering operating a contingent workforce, here are several key differences in a contingent worker and a traditional, full-time employee:.
CW: Not on staff; contracted for a specific project or length of time. CW: Can decide when and where the work is completed. CW: Determines their own process, steps and tools needed to complete the work.
CW: Performs work that requires highly specialized skills, typically not the organization's primary service. CW: Negotiates his or her own pay rates, including fixed amounts. CW: Must provide his or her own equipment and incur costs of completing the work. CW: Can delegate or outsource work to others. FT: On staff; works on an ongoing bases and can be terminated at will.
FT: Has a required work schedule and location. FT: Is given instruction on how to do the work, in what order and what tools must be used. FT: Performs work that is of the organization's primary service. FT: Is paid on an hourly wage or salary governed by minimum wage and overtime laws. FT: Must be reimbursed for any costs spent to complete work.
FT: Must perform the work on his or her own. Technology, and the pandemic, has revolutionized the working world and the nature of employment is changing. In response, organizations on a global scale are struggling to overcome workforce challenges created by these emerging technologies, shifting demographics and fluctuating demands for services by augmenting their traditional employment models with a more flexible and cost effective option: The contingent workforce.
In fact, organizations have dramatically increased their use of contingent workers over the past 10 years as they struggle with rising labor costs and the need for a workforce that can quickly adapt to market conditions. It's a global trend that stretches across industry sectors. Building a strategic workforce that includes contingent workers is a risky but rewarding business.
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