4 Reasons to Consider Contractors Before Full-Time Employees
Free Book Preview: Coach ’Em Way Up
Before I met my husband, I had to deal with the dating scene. I often found myself frustrated or disappointed with my options. So I tried a strategy: I initiated a six-week and 90-day cut-off. I’d be very upfront about it on the first date; I would schedule a casual check-in at six weeks and again at 90 days. If we weren’t having fun anymore at the time of our check-in, we both had a free “out” to use without fuss or anger.
It worked beautifully.
Not only did I feel relieved in salvaging friendships with suitors who didn’t make the cut, but I also stopped getting “ghosted” as often. The unanswered emails and texts were instead met with honest conversations, and when we did make it past the 90-day check-in, we were both completely invested.
(Personal note: It is true that only one partner survived the 90-day check in, and we are happily married to this day.)
Since this dating strategy worked so well, I have also tested it in the corporate environment -- with similar success. Here are four good reasons to ‘date before you marry’ and to begin your hiring process with independent contractors:
1) You keep flexibility and can continue to play the field.
Working with independent contractors allows employers greater leeway in hiring and letting go of workers. This is especially advantageous for employers who have fluctuating workloads. You can hire an independent contractor for a specific task or project without having a continuing obligation after the job is finished. As with my dating scenario, you won't have to face the trauma, expense and potential legal trouble that can accompany firings and layoffs.
2) You will accomplish more in your limited time together.
Because most independent contractors bring specialized expertise to the job, they are usually productive immediately, eliminating the time and cost of training. The onboarding process is significantly abbreviated when you start off with a defined scope of work, and you both can start off quickly accomplishing the agreed upon deliverables.
3) You reduce your exposure to messy break-ups.
Employees have a wide array of rights under state and federal laws, and therefore, a variety of legal claims they can potentially bring against their employers for violating those rights. Because contractors are independent businesspeople, they are not protected by many of these laws.
Among the rights of employees -- but not independent contractors -- are the following:
- the right to receive at least the minimum wage and, for employees who qualify, overtime compensation at the rate of one-and-a-half times their regular hourly wage
- protection from employment discrimination on the basis of national origin, color, religion, gender, and so on (ICs are still protected from race discrimination, however)
- the right to form a union
the right to take time off to care for an ill family member or bond with a new child
Employees may also be able to sue their employers for wrongful termination. Contractors cannot bring this type of lawsuit against you (although there may be restrictions on your right to terminate a contractor relationship, depending on what your written independent contractor agreement says).
4) You will probably save money.
While most employers pay independent contractors more on an hourly basis than they would pay employees to do the same work, it usually ends up costing employers more to hire full-time employees. When you hire an employee, you are required to pay a number of expenses that you don't have to pay for contractors, including employer-provided benefits, office space, and equipment. You will also have to make required payments and contributions on your new employee’s behalf, including at minimum:
- your share of the employee's Social Security and Medicare taxes, which is 7.65% of the employee's compensation
- state unemployment compensation insurance
workers' compensation insurance
All together, these expenses can easily increase your payroll costs by 20-30 percent or more.
You spend more time with your employees and coworkers than with your spouse, yet oftentimes make a full-time employment decision after only one date. Imagine announcing your engagement with a person with whom you had been on only one or two dates -- what would your mother say?
Hiring your team is just as important as selecting your romantic interest; you want to take meaningful time to filter out the unworthy candidates. Contracting before full-time employment makes a final match-up a good one.