What HR Needs to Know about Contingent Workers

Contingent workers are also known as freelancers, contract workers, or gig workers. Unlike full-time employees, contingent workers do not receive benefits or a salary. They are paid on a part-time or project basis. Usually, they remain with an organization temporarily. HR leaders have good reason to get to know this growing portion of the workforce. 

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By 2027, 86.5 million people will be freelancing in the United States, and they will make up 50.9% of the total U.S. workforce, according to Statista and reported in Market Watch. Frankly, this projection seems possible because the rate of contingent workers is steadily rising. Here is what HR professionals needs to know as this group grows and gets closer to overtaking the majority of the workforce:

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Cost Effective

Hiring freelance workers can help HR save money on talent. To start, these are temporary hires, so paying them only lasts a short time. They can rely on these workers for niche projects or specific skills for the time that they need them. Then, they can let the person go for any reason, including just wanting to end their contract. Freelancers do not get benefits, therefore they are always a more affordable option than hiring a full-time worker. 

In addition, contingent workers must pay their own taxes. The company is not responsible for taking out and paying taxes for them as they would for a full-time hire. There is no paid time off or anything of the sort, so if freelancers miss work, they do not get paid. Depending on the agreed upon pay structure, freelancers may get paid on-demand or in monthly sums. Either way, the company is simply paying for their work and nothing more. Their position may even be part of a project budget. 

Different Relationship with Employer

Freelancers are their own boss, so the relationship is closer to that of a client and customer than of a worker and manager. This can get complicated for those who end up staying for longer projects or almost become part of the team.  

Employees have some loyalty built into the relationship. They know that a paycheck and benefits are continuous, and that the company chose to invest in them for the long haul. It's not like that for contingent workers. They will always be looking for more work. They could be dividing their time among many clients. In addition, contingent workers can also end the relationship at any time. 

More Flexibility

While the fact that the relationship can come to a halt at any time because of the nature of freelance contracts can be seen as a negative, this also allows for greater flexibility. For example, if the economy takes a turn for the worse and HR professionals are looking to cut fat, they can ask freelancers to leave to avoid laying off full-time workers. This works the other way, too. Of course, freelance workers who get better opportunities may also opt out with little to no notice. 

Still, contingent workers provide greater flexibility around scheduling, reduction in force issues, and projects. As projects begin and end, companies can expand and contract their contingent workforce accordingly without having to deal with the bureaucracy of a layoff. 

Could Influence the Culture

Part of the reason companies hire an employee is for fit. They meet criteria that will help them support and even enhance the company culture. In addition, they understand the mission and values that leadership wants to carry out. Employees invest their time and focus on being part of the team. 

Contingent workers, on the other hand, have no skin in the game so to speak. They are there to do a job and nothing more. Therefore, a company that relies heavily on freelancers could end up with little to no culture or one that is poorly defined and demonstrated. 

In just a few year's time, employers can anticipate having more contingent workers in the market than full-time employees (or job candidates seeking full-time employment). There are pros and cons to hiring contract workers even if the United States is slowly moving toward a gig economy. HR leaders must weigh the flexibility and cost savings against the lack of loyalty and missed opportunity for growing a company culture, which is often tied to brand.  

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