There are many different types of employees that small businesses can engage. In this blog post, we will discuss the differences between independent contractors and temporary workers.
Both types of employees have unique benefits and drawbacks, so it is essential to understand them before deciding which type to hire. Let’s start by discussing what an independent contractor is.
What Is an Independent Contractor?
An independent contractor is an individual who provides services to another party under terms specified in a contract or engagement agreement.
Jessica Elliot explains that independent contractors are usually self-employed. “They may also be referred to as freelancers, contract workers, independent consultants, or gig workers. You don’t pay payroll taxes or count them as employees for governmental reasons,” asserts Elliot.
In addition, independent contractors operate according to their own business needs and can be recruited through freelance marketplaces like Upwork. For instance, they can have their business and procedures to interact with multiple clients.
Also, independent contractors are completely independent regarding their work since they provide their tools and equipment. Finally, they are not entitled to company legal benefits and are responsible for their taxes.
What Is a Temporary Employee?
Temporary employees are workers hired to work for a set period, after which the company no longer employs them. Businesses and agencies often hire temporary staff to fill roles that are needed on a short-term basis or to cover for employees on leave.
Likewise, temporary employees can be hired through staffing agencies, or they can be remote employees who work from home.
Business owners often prefer to hire temporary staff because it is less expensive than recruiting and hiring full-time employees, allowing them to have a larger pool of workers to choose from.
Additionally, temporary employees don’t receive the same benefits as full-time employees, such as health insurance or paid vacation days. However, some companies offer temporary employee perks such as discounts on products and services.
In this video, you can learn more about what is a temporary employee.
Contrasts Between Independent Contractors and Temporary Employees
Temporary employees and independent contractors are both workers hired or engaged to fill a specific need for a limited time. Contrasts between these workers can be understood by considering payment, taxation, and benefits. In addition, it is helpful to consider relationships, work habits, and training opportunities to understand the differences between temporary and independent contractors.
Payment, taxation, and benefits
Jennifer Post affirms that payment, taxation, and benefits represent the biggest differences between contractors and temps. They differ in the way they’re paid and taxed.
For instance, “an employee is on a business’ payroll, so the company pays the employee their hourly wage or salary and withholds the appropriate taxes. Also, an employee has benefits like health insurance, paid vacations, and commuter benefits,” says Post.
On the other hand, independent contractors don’t have these benefits and are less dependent on the organization.
Relationship, Work Habits, and Training Opportunities
Autonomy, work habits, and training opportunities distinguish independent contractors and temporary employees.
Independent contractors are the most autonomous workers and tend to work remotely. Also, they don’t receive training opportunities. Generally, independent contractors only get essential information to undertake their tasks.
In opposition, temporary employees are less independent, they have to commute, but they can enjoy numerous training opportunities.
Why Hire a Temporary Employee Instead of an Independent Contractor?
When a company needs extra help, they have two primary options: they can either outsource the work of an independent contractor or a temporary employee. While each option has its own advantages, there are a few key reasons why a temporary employee is often the better choice.
First of all, hiring a temporary worker gives a company more control over the employee. With an independent contractor, the company is limited in what they can ask the person to do and how they can manage them.
With a temporary worker, however, the company can set very specific expectations and supervise them closely if necessary. Additionally, staffing agencies that provide temporary workers usually handle all of the payroll and benefits administration, saving the company time and money.
Finally, temporary employees are also more likely to be local, while independent contractors are often remote. This can be important for companies that need face-to-face interaction or need to minimize travel costs.
As you can see, there are significant differences between a temporary employee and an independent contractor. Both have unique features, so it’s essential to evaluate all factors before making a decision.
At the end of the day, the most important thing is finding a staffing solution that fits your unique needs and helps your business grow.