For longer than you may realize, employers have hired contingent workers whenever they needed some extra help. Recently, however, there's been a bit of a population explosion in the contingent worker labor pool. The main reason is the troubled US economy. With millions of workers being laid off, workers are starting to work for themselves rather than looking and competing for a "regular" job. (Or, they're working as a contingent worker while they're job hunting).
If you've been laid off, or if you think layoffs are on the horizon, contingent work may be a good avenue for you to explore. It can be a winning combination for you and an employer.
What's a "Contingent" Worker?
You've heard of contingent workers before, but maybe just not by that name. Contingent workers are also called temporary workers or "temps," independent contractors, freelancers, contract workers, and consultants. They all do the same thing: they work for a company, business, or another individual on a temporary basis.
Sometimes, you may be hired under a contract to perform a specific task or work on a project. Designing and developing a Web site is a good example. Other times you may work on an hourly or commission basis during the employer's busiest seasons. Salespersons are often hired as contingent workers, for example.
Depending on the project and your personal resources, you may have to work on the employer's site or at its office, or you may be able to work from your home or your own office. Generally, the person hiring you can't tell you exactly how to do the project. Presumably, you're being hired because you have the skills, experience and education to do a certain task. So, the employer's focus isn't so much on how you do it, but rather it's on you getting it done within the time allowed by the contract.
For example, a business may hire you to edit articles that it plans to publish in a magazine, giving you two weeks to finish. Generally, it doesn't care if you work everyday for those two weeks or do all the work in a couple of days. It typically won't require you to make edits in any special way or format. So long as you get the work done properly and on time, you'll get paid.
Usually, employers are very careful about the amount of control and instructions it will give you. That's because if they exert too much control over how and when you do your work, you may be considered an employee rather than a contract or contingent worker, which can be costly for an employer. For example, employers are required to pay various taxes for its employees and give them benefits, like paid vacations and health insurance, but they don't have to do so for contingent workers.
Pros and Cons
Being a contingent worker has many benefits. For example, you can choose who you want to work for, what types of projects you want to do, and set your own hours (unless you're working on the employer's site). And, perhaps most important, you should be able to find work when you need it. Many employers like to hire contingent workers because it's cost-effective. It's often cheaper for a company to hire you temporarily than to hire a true employee. That's because it doesn't have to pay employment taxes for you or give the same benefits that it gives to its employees.
There's a downside, too, though. First, you'll have to withhold your own federal and state income taxes. Also, you have to pay all Social Security and Medicare (FICA) taxes on the money you make. Employers have to withhold and pay a portion of these taxes for true employees. For you, these taxes are called the self-employment tax (SE).
And, even though there may be a big increase in demand for contingent workers, there's no guarantee that you'll be able to find work when you need it. In addition, you won't have an employer-paid pension or retirement plan, so you'll have to pay for your own. You'll also have to get used to not having paid time off ("PTO"), like vacation and sick days, and covering your own overhead costs, like the costs of office supplies.
You can find work in any number of ways. Word-of-mouth, tips and from friends and former co-workers, and newspaper ads are good ways to find a project. Also, the Internet or "Web" lists dozens of sites that can help you find contingent work. Some let employers advertise job opportunities that you can search; some will let you post your skills and availability, sort of like a "job wanted" ad; and some will do both. Some sites are free, while other charge a fee for using the site.
For years, however, contingent workers have used the services of specialized firms to find work. They go by various names, but you've probably heard a few, such as employment agencies, temporary staffing services, and "temp" services or agencies. Regardless of the name, they all operate in a similar way. Typically, a business or company will hire an agency to locate and hire workers it needs for a short-term project or task. The agency will interview you and send you to the company or business to start work.
Sometimes the company or business will pay you directly, but most often the employer will pay the temp agency, which in turn will pay you. Also, if the company or business likes your work, it may request you in the future. The reverse is true, of course. If you do a poor job, it will likely ask the agency to send a replacement worker.
You Still Have Rights
Even though you're not an "employee" of the company or business that hires you as a contingent worker, you're still protected by many of the state and federal employment laws. For example, in general, the company that hires you or the temp agency:
Questions for Your Attorney
- I'm registered with three different temp agencies, but I haven't heard anything from them in quite a while, and they won't return my calls or emails. Can they "blacklist" workers and refuse to send them on jobs?
- While on a temporary assignment at XYZ, Inc., I was injured when I slipped and fell on some ice in the parking lot. The human resources department there told me that I wasn't eligible for workers' compensation. Is that right?
- I'm a contingent worker in a company's engineering department; I got the job through a staffing agency. I just found out that the company is paying the agency $45 per hour for my services, but the agency is only paying me $32 per hour. Can it do that?
Related Resources on Lawyers.comsm
- Sample Independent Contractor Agreement
- Taxes for Employees vs. Independent Contractors
- Unemployment Compensation
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