What is a Contingent Worker?
A contingent worker is an individual who provides services to an organization under a contractual basis, temporary, or as-needed arrangement. Unlike regular employees, contingent workers are not on the company’s payroll and receive no employee benefits.
Types of Contingent Workers
Contingent workers come in various forms, but some common examples are:
- Freelancers
- Independent Contractors
- Consultants
- Temporary Staffing Agency Workers
- Gig Workers
Benefits of Contingent Workers
Employing contingent workers can offer numerous benefits to organizations. Among them are:
- Flexibility – Contingent workers offer the benefit of filling expertise gaps within an organization. They come as-needed and can be let go once their contracted duties are satisfied.
- Cost-Effective – Hiring contingent workers can be cost-effective as businesses don’t need to provide them with benefits.
- Increased Productivity – Due to their expertise and short tenure within an organization, contingent workers are expected to have a relatively high work output.
Contingent Workers vs. Regular Employees
Unlike regular employees, contingent workers have no job security, do not receive benefits, and are often let go once their work is done. Misclassifying an employee can lead to legal action that could prove to be costly for employers. Organizations must understand that it is illegal to misclassify employees to save money on taxes or benefits.
Contingent Worker Classification
Employers must properly categorize workers to avoid expensive repercussions for misclassification. To classify correctly, an employer must consider several factors, including:
- The length of the engagement
- The nature of the worker’s duties
- The control over the worker
- The degree to which the worker works independently
- The worker’s organizational fit
It is essential to seek competent legal assistance when classifying employees, as legislation surrounding employment is complex.
