If your company hasn’t worked with an independent contractor or freelancer before, chances are you might be considering it now. The concept of a “gig economy” was already trending before the pandemic. And now that people have gotten a lot more comfortable working from home—or anywhere else besides the office—there’s also a “Great Resignation” afoot.
For many companies right now, it might be challenging to find (or keep) that classic full-time employee for certain roles. But they’re discovering that for some needs, an independent contractor or freelancer might be a good option.
“Everyone is getting a little bit more open-minded to non-traditional positions,” says Karen Mosteller, a partner at Markham Norton Mosteller Wright & Co., which offers accounting and business consulting services in Southwest Florida.
According to researchers at Harvard Business School’s Project on Managing the Future of Work and Boston Consulting Group’s Henderson Institute, 90% of companies surveyed see benefits to workplaces that blend full-time and freelance employees. And an analysis by Statista projects that 86.5 million people in the United States will be freelancers in 2027, making up almost 51% of the total U.S. workforce.
To figure out the best fit for your needs, use the strategy of buy, build or borrow, said Heather Deyrieux, immediate past president of the HR Florida State Council, the state affiliate for the Society for Human Resource Management (SHRM). “Look at each position to know what skills are needed and how long the assignment, workload or project is going to be,” she says.“Then use that matrix to decide what’s the best option.”
If it’s an ongoing need, a full-time employee might be the best choice. That could be a new hire or someone already in the organization who can be trained to take on a new role. But if it’s a temporary increase in workload, a project with a finite timeframe or a role that doesn’t require someone in the office from 9 to 5 Monday through Friday, an independent contractor might be the way to go.
“If you only need a controller for 20 hours a week, then you can hire a [freelance] controller that has two or three clients for cheaper than it is to have them on as an employee and have all the additional costs and benefits you have with an employee,” says Mosteller.
If you choose to go the contractor route, it’s important to understand the definition of independent contractor according to entities such as the IRS and Department of Labor, and how it differs from an employee. “Should an employer misclassify a worker as an independent contractor who should be classified as an employee, the penalties can be extremely costly,” says Katie Brennan, an HR knowledge adviser for SHRM.
For managers, working with independent contractors requires a shift from how they would manage in-office, full-time employees. “The employer really needs to think about, ‘What is the outcome I want?’” says Eric Dent, PhD, the Uncommon Friends endowed chair in ethics at Florida Gulf Coast University’s Lutgert College of Business.“You have to manage by outcome instead of hours, and for many employers, that is new and a bit of a transition.”
But qualified independent contractors probably won’t need much handholding. “Independent contractors are usually seasoned experts in their fields,” says Brennan. “The onboarding process or training is minimal, and they typically hit the ground running.”
Plus, the last year has given companies a lot of experience managing from afar. “Remote work has forced employers to have to learn how to manage without their eyes on their subordinates,” says Dent. “So they’re better prepared to work well with independent contractors.”
Communication is vital to a successful relationship. “If the company is looking to have access to the contractor during certain business hours, they need to know that upfront,” says Deyrieux. “Both sides need to know what is expected of them and how that communication will happen during the relationship.”