What is a Contingent Worker?

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Being successful and profitable is usually the most important thing to a business, so many companies use contingent workers to keep costs as low as possible. Contingent workers, unlike regular workers, are hired to do a specific job, which can be beneficial to both the worker and the company.

What is a Contingent Worker?

A contingent worker is described as an independent contractor, freelancer, consultant or some other non-permanent and out-sourced worker who is hired on a per-job basis. Unlike temp workers, who are often unskilled and receive on-the-job training to complete a certain job, contingent workers are usually highly trained and skilled for the specific job in which they’re hired.

When a temp worker is hired, they’re hired to do whatever the company needs, and their employment may last as little as a month or indefinitely. Contingent workers are generally hired under a statement of work provision, which details what the job is and how long the worker will be there to complete the job. When the job is done, the contingent worker leaves the company. He or she may be hired again by the company if they need another project completed at a later date, but each job or project is a separate employment agreement.

Differences Between Contingent Worker and Employee

One of the main differences between contingent workers and regular workers is that contingent workers are not considered employees. A regular employee is hired by a company to work for them every day completing whatever tasks are needed. Contingent workers work on a temporary basis or are under a contract. Their employment is contingent on the job for which they’re hired. The job may be for three months or until the specific job in which they’re hired to do is completed.

One example of a contingent worker might be an independent tax consultant or accountant. The accountant might be hired at tax season with the purpose of completing an organization’s taxes. The accountant is hired to come into the company and complete the taxes. Once the taxes are completed, the accountant’s job is done and he or she moves on to another company.

Whereas employees are usually paid an hourly wage, a contingent worker is paid a specific payment and possibly a commission when the job is complete. A contingent worker is also not offered company benefits like insurance, vacation pay or profit-sharing. They are only paid to do the they are hired to do. Additionally, they are responsible for their own taxes as opposed to employees who have taxes taken out of each paycheck.

Contingent workers are not given directions on how to do the job. The company that hires contingent workers is only concerned with the job getting done and getting done on schedule. Because contingent workers are usually highly skilled in the job they’re hired to do, they don’t need instructions. The Fair Labor Standards Act, a division of the United States Department of Labor, has specific guidelines as which workers can or cannot be classified as contingent workers or employees as well as what types of benefits each can expect.

Why Employers Want a Contingent Workforce

The main reason why employers want a contingent worker or workforce is that it allows them to expand their labor force and improve their work output without accruing more costs for things like health insurance and other employee benefits. The company is also not responsible for taking out income taxes or paying workers’ compensation on the worker. Because contingent workers are usually highly skilled in what they do, the employer doesn’t need to waste time and money training new employees or paying for exit costs or severance packages.

If a company has a specific job that needs to be done now but will not be necessary for the future, the company is not stuck with an employee whose skills will not be needed over the long term. The contingent worker comes into the company, gets the job done, gets paid and moves onto the next job. It’s a win-win situation for both the contingent worker and the employer.

Benefits of Being a Contingent Worker

There are several advantages for the contingent worker, but the biggest advantage is that the worker has the chance to build on his or her skills professionally and gain a good reputation in the business world. Contingent workers often work on various jobs from different companies. Each time a contingent worker is hired for a job, the worker obtains more experience and another notch on his or her resume and list of professional references. It also gives the worker the chance to determine what type of company best suits their skills and interests.

Contingent workers are given the opportunity to communicate with various types of management, which can also improve their number of professional references and overall job experience. Word of mouth is often the best type of advertisement, and contingent workers can get a lot of this type of advertising on their behalf each time they successfully complete a job for a company. Contingent workers also have more flexibility to pick and choose which job they want to accept. They can also schedule their jobs around their family or other commitments they might have.

Impressing Your Employer While a Contingent Worker

The U.S. Bureau of Labor Statistics reports that about 3.8% of employees, or 5.9 million, were contingent workers as of May 2017. The small number of contingent workers makes it easier for contingent workers to impress their employer with the hopes of future employment. Impressing an employer while employed as a contingent worker is important because it can lead to more work in the future. Ways to impress an employer while working as a contingent worker include:

  • Be respectful of the employer and the company’s employees
  • Get a clear knowledge of what the job entails
  • Be as productive as possible right from day one
  • Don’t be afraid to communicate with others on the job
  • Don’t act superior to other employees
  • Work as efficiently as possible even if it means completing the job earlier than anticipated

Sources:

https://www.bls.gov/news.release/conemp.nr0.htm
https://hrdailyadvisor.blr.com/2008/09/26/risks-benefits-of-using-contingent-workers/