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What Is a Contingent Worker?

Reviewed by Brendan Sullivan, Indeed Recruiter
4+ years of experience, 150+ roles filled

If you need extra staff support for a short period of time, consider hiring a contingent worker. Before creating a staffing plan, make sure you understand what a contingent worker is and how they can impact your business.

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Whatis a contingent worker?

A contingent worker is someone you hire for a specific period of time or project. Businesses pay contingent workers to complete work on specific terms and typically don’t offer benefits. Contingent workers are responsible for their own taxes, so you don’t withhold income and Social Security tax when processing their payroll.

When to hire a contingent worker

Anytime you need short-term, specialized support, you may need a contingent worker.Independent contractors, freelancers, consultants and temporary workers are all types of contingent workers. Contingent workers often fill roles in creative industries and skilled trades. Some of the common roles contingent workers fill are:

  • Repair and maintenance
  • Web design
  • Tutoring
  • Software development
  • Construction
  • Business consulting
  • Taxes and accounting

You hire a contingent worker independently by using job boards or outsource the hiring process to a temp agency. Depending on your project, you may go through an interview process or place a bid using a freelance site.

Benefits of hiring contingent workers

Contingent workers give business owners the freedom to curate their workforce depending on their specific needs. Especially during the growth stage, businesses rely on contingent workers to fill in gaps in skills and experience. Some of the benefits of hiring a contingent worker for your business include:

Increased flexibility

The temporary nature of contingent work allows businesses to be more flexible with how they structure their staff for different projects. Short-term contracts with contingent workers help business owners adjust to prepare for seasonal increases in demand. It is also easier for employers to end professional relationships with contingent workers that aren’t a good fit for the company. If a contingent worker makes a great addition to your team, you can always ask them to transition to full-time employee status.

Related: How to Convert Contractors to Full Time Employees

Simplified administration

Because you don’t have to handle benefits and tax withholding for contingent workers, you can reduce the amount of time you spend on human resources administration tasks. You also spend less time processing employee onboarding, payroll and ongoing benefits distribution. Some temp agencies handle payroll in-house, making it even easier to hire a contingent worker.

Reduced labor costs

Hiring contingent workers can save you money by only paying for essential tasks to running your business. Even contractors with a higher hourly rate may be less expensive over time than a regular employee with a lower yearly salary. The money you save on health insurance coverage, paid time off, overtime and other company resources can add up over time and significantly impact your bottom line.

Related: The Difference Between Exempt vs. Non-Exempt Employee

Access to experts

Contingent workers can give your business access to highly skilled professionals that you may not have the resources to hire full time. If you need a certain set of high-level skills for a project, consider hiring a contingent worker instead of spending company resources trying to train current staff or tackle the problem yourself.

Risks associated with contingent workers

There are some risks to consider when hiring contingent workers:

  • Inconsistency:Full-time employees who have worked at your business for a long time have an advantage over contingent workers when it comes to consistency between projects and following company standards.
  • Reduced loyalty:Contingent workers don’t have a commitment to your company beyond their contract, and they may have less motivation to produce high-quality work for your company.
  • Legal considerations: Workers’ compensation insurance doesn’t usually cover contingent workers, and there can be legal consequences to misclassifying employees as contingent workers.

Frequently asked questions about contingent workers

What is the difference between a contingent worker and a contractor?

A contractor is a type of contingent worker. Contingent workers can be employed through a staffing firm or temp agency, while contractors typically work independently.

Why do companies hire contingent workers?

Companies hire contingent workers to accomplish specific projects or provide additional workforce support during a set period of time.

What are the disadvantages to contingent work?

One of the main disadvantages of contingent work is a lack of control over how a project is completed. Each contingent worker’s approach to their work is different.

Brendan Sullivan is an Indeed recruiter based in Austin, TX with 4+ years of experience. You can usually find him enjoying one of the several amazing coffee shops in Austin or organizing his record collection.

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