Hiring Contractors vs. Full-Time Employees

There are two kinds of work tasks: those that need to be done on a regular basis, ‘the routines,’ and then those that appear every now and then unexpectedly and need to be dealt with, ‘the outliers.’ Like the matching section of your old elementary school history tests, you will sometimes need to decide which type of employee you need to solve the problem at hand.

It comes down to a matter of efficiency. Sure, if you need a lot of filing done in a short amount of time you can hire temps, but if you have an outlier that requires specialty training then you won’t be able to pluck just anyone you find on craigslist. This is where contractors are a great asset. If you don’t have enough manpower to take care of the outlier because the rest are too busy on an influx of routine work or outliers of their own, you will want to consider hiring a contractor.

Contractors are great because they are simple. Once you find the right contractor and negotiate the price you just let them get started on their work. You don’t need to offer any kind of health insurance or file any tax paper work for them; contractors work for themselves so they have to take care of everything themselves. Once the contractor finishes the job, they leave and you never have to see them again. Of course, if you have the same outlier later on and the previous contractor did very good work you might want to keep their contact information.

In this situation you wouldn’t want to hire a full-time employee because what’s the point? It’s a one time job you need doing so you don’t want an employee that’ll stick around afterwards. Sure, I am an advocate for hiring people, but I’m also an advocate for efficiency and it just isn’t good business sense to hire a new employee when a contractor can do the same job and then leave right afterwards when you don’t need him or her anymore.

However, the one thing you need to remember about contractors that’s different than employees is this: they do not work for you. The distinction is simple: employees work for you, contractors do work for you. This means that you cannot micromanage a contractor like you would an employee and you shouldn’t offer them resources aside from their paycheck. If you are a construction company and you need a contractor to lay down some brick work, don’t let them use your trucks to get supplies. While obviously you CAN do all of these things, legally there are some stipulations.

The IRS and the Department of Labor can come down on you hard with audits if they suspect you hired someone as a contractor and then treated them like an employee just so you wouldn’t have to deal with the taxes. You have to be careful there because they love auditing people. If you know you have a manager who loves to micromanage, make sure to talk to them about what they can and can’t do before hiring a contractor.

Ever needed to hire a contractor for an outlier work task? Tell us about it below!

IMAGE: Courtesy of Flickr by USACE HQ