What is the Difference Between a Contractor and a Contingent Worker?

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Contingent Worker vs Contractor

What Is a Contingent Worker?

A contingent worker is an individual who is hired to fulfill certain tasks or projects. They may be hired on a temporary, as needed, or contracted basis, rather than permanently.

Benefits of Contingent Workers

Hiring contingent workers, or implementing a contingent workforce, can have some sound benefits for a company. Most of these are financial advantages over hiring permanent employees. With contingent workers, not only do companies not have to handle or pay employment taxes, but they also do not have to offer health benefits, vacation days, or overtime. This saves money in not only these categories and those associated with recruiting and hiring, but in the administrative costs of payroll and human resources as well.

Contingent workers offer increased flexibility to an employer, too. If, for example, a sudden increase in work arises, or a key project, a company can hire a contingent worker to handle the task. Then, when things slow back down, the employer is able to end the contract with the contingent worker, rather than being stuck paying the salary of a permanent employee that would have otherwise been hired for this sudden influx of work.

For those who are looking to become contingent workers, there are benefits as well, including being able to work more independently and choose to work on projects that interest you. Being a contingent worker can also mean that you are able to make more money, work fewer hours, or some combination of the two!

Disadvantages of Contingent Workers

Of course, like anything, there are some disadvantages to a contingent workforce, too. Business owners have less control here and with these workers than they might have with their permanent employees. For example, they are unable to rely on contingent workers being available during specific hours– unless these hours were negotiated in the contract. They are also unable to manage just how the work is being done.

If you are looking to become a contingent worker, you will be essentially self employed. This comes with some responsibilities that would not be on your plate if you were a permanent employee of a company, such as handling your own employment taxes and business financials– which can certainly be complicated! You will also have to find your own healthcare and plan for your own benefits and vacation or sick time, as this is not provided by companies to their contingent workers.

What Is a Contractor?

A contractor is also a type of contingent employee. They are typically hired on a contracted basis to fulfill a specific project, and are highly specialized in their particular field of experience.

Benefits of Contractors

Just as with hiring contingent employees, it is advantageous for a company to employ contractors for certain projects or tasks. Independent contractors save a company money in regards to taxes and benefits, since these do not have to be offered to contractors. They can also save a company money in regards to training. Contractors are typically highly specialized in their chosen fields and have the experience necessary for the projects assigned to them. This can eliminate the need for any training time, which would have been necessary for new permanent employees. This experience can mean that the contractor will be more efficient and able to get the job done quicker and more independently, too.

For those considering work as a contractor, one of the big draws is that you can make your own hours and choose your own pay rates, similar to contingent workers. You are also able to feel the accomplishment of working for yourself and being your own boss! Unlike permanent employees, a contractor can choose not to do something they do not want to do, unless it was agreed upon in the contract. You do not have to take on projects that are not a good fit or that will not interest you.

Disadvantages of Contractors

One of the big things that companies may be concerned about when hiring contractors is incorporating them into the company and retaining company culture, as they are not permanent employees and work independently– and sometimes even off site. Company culture is important to keep a business running smoothly and harmoniously. Employers are also unable to control how contractors do their work, which may be difficult for some, depending on their management style.

While some types of contingent workers can find work through a staffing agency, you are only considered a contractor if you are hired through your own business or fim. That means that you do not have anyone going to bat for you, whether for your paycheck or to help find you jobs in the first place. It can require more work in trying to find yourself a good position, as well as time spent advertising or getting the word out about your skills and offerings on social media platforms.

Frequently Asked Questions

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

A contractor is typically hired under a contract, while a contingent worker could also be hired on an as needed or temporary basis. Contingent workers may also be hired through a hiring or staffing agency, and contractors cannot.

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

Independent contractors are a type of contingent worker, but to be considered an independent contractor, you must be hired through your own agency, consulting firm, or business, rather than through a staffing agency.

What is an example of a contingent worker?

Contingent workers are independent, freelance, or contracted workers, such as someone who is contracted to assist with marketing new products or a business consultant contracted to help strategize as a company prepares to scale.

Do contingent workers get paid more?

Skilled occupations do generally pay contingent workers more, but industries such as craft or repair tend to pay contingent workers and permanent employees around the same rate. This does also depend on the level of skill required of the project a contingent worker is hired for.