Contingent Worker: Benefits, Recruitment, and Management

When you’re a recruiter, you come across clients who want all types of workers. Instead of an employee, a client might want to hire a contingent worker.

Contingent labor is also known as an alternative work arrangement. According to one study, alternative work arrangements make up more than 15% of the labor force. Learn what contingent employment is, its benefits, and how you can help your clients manage a contingent workforce.

What is a contingent worker?

Contingent employment means a worker’s position with a company is temporary. The individual is not an employee of the business, and therefore isn’t hired on a permanent basis. Typically, contingent workers are hired to complete a project.

Who are contingent workers? Independent contractors, on-call workers, freelancers, contract workers, and any other type of individual hired on a per-project basis are examples of contingent staffing.

In most cases, contingent workers have specialized skills, like an accountant or electrician. Unlike regular employees, a company doesn’t always need to tell a contingent worker how to complete a project. Instead, contingent workers use their judgment.

If your client wants to hire a contingent worker, they generally do not need to handle employment taxes. Contingent workers who are independent contractors are responsible for paying their own taxes because they are self employed. Contract workers are on the Employer of Record’s payroll, not your client’s. The Employer of Record might be you or another third party provider of contract staffing back-office services.

Contingent workers know they are not part of a company’s permanent staff. Sometimes, contingent work can turn into permanent employment, like if your client wants to hire a contract worker full time. This type of arrangement is known as a contract-to-hire agreement.

Benefits of contingent workers

Below are a few reasons your client might opt for a contingent worker instead of a permanent employee.

No tax responsibilities

With regular employees, employers must handle federal, state, and local income taxes as well as Social Security and Medicare taxes. When an employer withholds Social Security and Medicare taxes for their employees, they must make a matching employer contribution.

Because contingent workers are not employees on your client’s payroll, your client is not responsible for withholding and depositing employment taxes like they would for regular employees. And, they do not need to make an employer contribution for Social Security and Medicare taxes.

If the contingent worker is an independent contractor, they will need to pay self-employment tax. If the contingent worker is one of your contract workers, you will need to withhold taxes from their paychecks.

Less financial obligation

Generally, a business must spend money on benefits to attract and retain employees. Your client does not need to offer health insurance, personal time off, retirement plans, or other contract employee benefits to contingent workers.

Your client only needs to pay contingent workers for the work they do.

Saving money on benefits as well as eliminating annual salaries can be a relief for many businesses. Plus, your client saves money on Social Security and Medicare tax contributions, as well as unemployment tax payments.

More flexibility

Hiring an employee is a big commitment. Your client might not need to add a permanent employee to their workforce to complete certain projects. When your client hires a contingent worker, they have more flexibility. The worker is only hired for a specific amount of time.

Let’s say your client needs to set up a website for their company. They need a web developer to create the website, but they do not need their services once the website is up and running.

Hiring contingent workers can also give your client more options. Some workers want flexibility and don’t want to be tied down to just one job. With contingent staffing, your client can open up the job to attract a wider array of job seekers, which is especially important for finding individuals with technical or other specialized skills.

Recruiting contingent workers

If you receive a job order for a contingent worker, your recruitment process might be different than sourcing regular employees.

Whether you are outsourcing workers or providing contract workers, make sure you fully understand what your client needs. You and your client must be clear in the job description that the position is not permanent.

Don’t neglect referrals, especially when it comes to technical skills. Gather candidate referrals, reference your recruitment database, and use job boards and social media to source contingent workers.

When screening and interviewing workers, find out their future goals. Reiterate that the position is not permanent. And, be thorough. The contingent worker should still match your client’s work culture, even if they are not a permanent addition.

You and your client might need a lawyer to look over the job description, draft contracts, and verify the individual is classified correctly.

Contingent workforce management

Once you are hired to recruit contingent workers, you and your client need to engage in contingent workforce management.

Help your client create a contingent workforce policy to boost engagement and harmony in the workplace. Contingent workers should honor and follow the company’s policies and principles. The contingent worker policy should be expressed in contracts or other formal documents.

If you are providing contract workers on your payroll, you are in charge of paying the employees on your payroll, managing benefits, handling paperwork, and more. To save time and eliminate stress, use a contract staffing service.

FoxHire’s contract staffing solution handles the legal, financial, and administrative details of the process for both 1099 workers and W-2 employees. We’ll do the work so you can get back to making more placements.