All-4-HR Blog Spot: Are Independent Contractors Your Answer?

This month we have been focusing on hiring and recruiting. Thus far, it has been recruiting. Recruiting and Hiring is All-4-HR & Business Solutions is this month’s topic! I know we all have hiring horror stories! If you have a hiring horror story, click here for a chance to win a gift card.

Attracting and retaining talent requires some creative thinking. Sometimes it requires thinking out-of-the-box. Yikes! How many are you are using contractors? Have you considered contract employees vs. contractors? Sometimes contract employees can be cost effective means for handling work overflows or a project that requires a special expertise that you are in need of to make your company operate more effectively and ease some added strain on employees.

You may think independent contractors and contract employees are the same. They are not. If you are considering contracting services, be sure of what you want -- an independent contractor or a contract employee. They are indeed two different classifications. Contract employees can be hired for a defined period time for a pay rate however it is with the supervision and/or direction of the company.

Seasonal, part-time, full-time and contract employees are all employees. Their time is directed and/or supervised by the employer. They work a certain amount of hours. They are also subject to FMLA, FLSA and other laws. An independent contractor however, is in control of their time, methods and procedures by which work is performed.

For example a painter may be hired to paint a building for a predetermined rate. The painter performs the work (the paint job) by his/her own procedures and methods to complete the job without supervision and/or direction.

One may think he/she is an independent contractor as you both entered into a contract. NOT SO! Having a contract in place does not mean he/she is an independent contractor. A contract simply outlines the terms and conditions of employment (such as benefit eligibility). A “non-employee” independent contractor relationship adheres to certain guidelines. Having a contract is just one of the criteria.

Independent contractors are normally in business for themselves and solicit business through advertisements, maintains a business location or phone number, and has band accounts in the name of the business. A “red flag” is when a worker establishes a business for the sole purpose of taking on a contract with a specific employer, but does not work for any other businesses.

An employee is paid through payroll with income being reported on a W-2 Form. Payments to independent contractors are reported on an IRS Form 1099.

These are some things to consider if considering a relationship with an independent contractor.

Click here for a Contractor Checklist.

Don't forget to join for a Recruiting Q & A Google Hangout on Thursday, March 19th @ 7pm

Join us for Recruiting: The Good, Bad and Ugly low cost webinar Thursday, March 26th @ 7pm

Until tomorrow—Have a Great HR Day!

April D. Halliburton
Founder/CEO/Virtual HR Manager and Consultant