How to Utilize Contingent Workers

Before 2020, contingent and temporary workers were most often seen in industries with a seasonal or project-based "swing”. When projects went into crunch time or the busy season hit, companies would temporarily hire contingent workers to fill in the gaps and help them hit their goals. In recent years, the hiring of contingent workers (also known as temporary workers, independent contractors, and freelance workers) has exploded with the rise of remote work, and, as time goes on, more and more businesses are taking advantage of the cost savings that come with enlisting temporary help as need demands! In this guide, we'll cover some of the most common types of contingent workers, explore the benefits that working with them can provide, and provide a few tips on how to make temporary help worth the effort.  

What is a Contingent Worker?

A contingent worker is an individual hired to perform specific tasks for an organization on a part-time or as-needed basis. The types of contingent work most are familiar with include independent contractors, freelancers, certain kinds of remote workers, and seasonal employees. Unlike permanent staff, non-permanent workers are typically hired on for a specific project, task, or busy season, and they do not rely on your organization for full-time, year-round employment. Another key difference between contingent workers and full-time employees is that temporary workers are not added to the company payroll and do not receive other company benefits like health insurance, retirement plans, or PTO. 

Temporary Workers for Special Projects, Timelines, etc.

As stated above, temporary workers are most commonly hired throughout the year to assist with a specific project, usually as a specialist, consultant, or as an extra pair of hands if a deadline is drawing near. Industries like construction, food handling, maintenance, and transportation often employ temporary workers as their workload increases throughout the year or as they enter their traditional busy season. Then, once the rush is over and the project is complete, temporary workers move on. Most of the terms below are used interchangeably in the industry due to the overlap between them, but there are a few differences. 

Independent Contractors

Independent contractors typically perform specialized services for a variety of clients on an as-needed or project basis. These workers usually provide everything they need to perform their tasks, including their own tools, equipment, and a vehicle. Like other contract workers, independent contractors are responsible for handling their own taxes, payroll, and benefits; all your business is responsible for is the price they quote you to complete the work. Independent contractors are often associated with construction projects, but can also include photographers, designers, accountants, and social media managers. 

Freelance Workers

Freelance workers operate similarly to independent contractors; the key difference between the two is that independent contractors can – and often do—work in teams or with subcontractors to offer their depth and variety of services, while freelance workers are typically solo acts. Also known as gig workers, freelancers have taken off with the popularity of remote work and continue to offer businesses valuable, affordable services on an as-needed or project basis. Like independent contractors, freelancers are also responsible for their own tax obligations and are not enrolled in your organization’s benefits packages. 

Seasonal Employees

Seasonal work is one of the most common varieties of contingent work and is the one most people are familiar with. In dozens of industries, like farming, snow management, lawn care, landscaping, and more, there is an expected bump in business needs around a particular time. Whether it's harvest season or on-call operators are needed to plow the roads after the next big snowstorm, countless companies rely on seasonal workers to get them through their busiest weeks or months. Once the season is over, these workers find employment elsewhere until the same time next year. Seasonal employees are often found through staffing agencies; if they are, their tax obligations are handled through that agency, not your business. If you take them on yourself, however, your organization will be responsible for their payroll and taxes, even if temporarily. 

Benefits of a Contingent Workforce

Enlisting the help of contingent workers as needed can provide significant benefits to your organization, which is why businesses worldwide are relying more and more on the help of freelancers and contractors to get the job done! Taking on contingent workers can result in significant cost savings compared to hiring, training, and providing benefits to regular employees – especially if the task you're hiring them for is project-specific and not consistent throughout the year. 

Increase Flexibility

One of the primary benefits of a contingent workforce compared to a complete staff of full-time employees is the increased flexibility that temporary workers can offer. When you take on contingent workers on an as-needed basis for a specific project or time of year, it’s much easier to ramp up or ramp down your talent pool based on your business needs, which can reduce your overall labor costs and improve job security for the full-time staff you do need.  

Foster a Larger Talent Pool for Specific Functions

Another benefit contingent workers offer over permanent employees is the ability to foster and maintain a large talent pool for specialized workers and specific tasks. With this advantage, you can work on a project-by-project basis and bring specialists on board when you need them without having to take them on full-time in an unjustified or overly specific position. This will also help reduce labor costs, keep your business running more efficiently, and cut out the bloat that comes with keeping one or two full-time staff members on for a task that doesn't come up as often. 

Bridge Any Skill Gaps

The same advantage that provides your business with a larger talent pool for specific tasks also enables your organization to bridge any skill gaps that may exist in your team. Contingent labor can always be brought in to offer specialized skills and fill in areas where your current team may not be as competent or experienced. This is especially helpful when dealing with an unfamiliar or unexpected area of your industry. With temporary help, you can solve the problem without committing to another full-time hire. 

Reduce Overhead Costs on Benefits, Taxes, etc.

One of the most valuable benefits employers receive from bringing on contingent employees is the cost savings. Most types of temporary workers do not receive employee benefits, including PTO and health insurance. Additionally, the majority of contingent workers are obligated to do their own taxes and payroll administration, which saves your organization both labor costs and time that would otherwise be spent managing these HR duties! Combined, these savings can significantly reduce your overhead costs in almost every area relating to employment, which can be vital for businesses that run seasonally or on a per-project basis. 

Tips for Navigating the Staffing Process for Contingent Workers

Just because contingent staff aren’t officially part of your organization does not mean you have no legal obligation to them. Several federal and state laws exist that manage how organizations are able to hire, pay, and treat temporary and contingent workers. Just as with your regular staff, it’s vital that you’re up to date on the latest laws and regulations to ensure that your organization remains in compliance. 

Note State Laws and FLSA Regarding Contingent Work

Both state laws and the Fair Labor Standards Act (FLSA) have some statutes and regulations that apply as equally to contingent workers as they do to traditional employees. For example, temporary workers are guaranteed certain Workers' Rights, such as:

• Wages – specifically overtime and minimum wage pay 
• Working hours and subsequent limitations 
• Working conditions and workplace safety 
• Protection against discrimination 
• Protection against harassment 
• Protection against wrongful termination

Before taking on help from a contingent worker, work with your HR department to ensure your business remains in compliance throughout the process. 

Use a Staffing Agency to Streamline the Process

Contingent workers frequently work with staffing and employment agencies to find regular work throughout the year, and it may be in your best interest to go through one of these third parties rather than engage a temporary worker directly. Staffing agencies help organizations find temporary help by maintaining their own talent pool and can often quickly and readily set you up with the exact skill set you’re in the market for. They also deal with most of the paperwork, which can free up even more of your schedule!

Have an Efficient Onboarding Process in Place

Whether you opt to work with a staffing agency or you decide to take on contingent workers directly, ensure you have a streamlined and efficient hiring process and onboarding pipeline for your temporary help. This includes everything from communicating directly about company policies and procedures, reinforcing your company culture, and providing direction and a clear chain of reporting for temporary staff. Of course, employers can benefit from a better onboarding process for both temporary and full-time staff, but it can be especially important when you’re constantly bringing in new faces for a short time.  

Horizon is a Trusted Partner for Businesses

Horizon has decades of experience providing small-to-medium sized businesses across every industry with a wide variety of industry-leading HR services! With our help, your organization can save time, cut costs, and ensure compliance with employment laws and regulations. 

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