Independent Contractor (in gig economy): A freelance worker who operates as their own business.
Independent Contractor
A freelance worker who manages their own business and is not considered an employee of the hiring company. They enjoy flexibility but must navigate their own tax obligations and business expenses.
Who is an Independent Contractor
An independent contractor is a self-employed individual who provides services to clients under a contract basis, rather than being bound by an employer-employee relationship. They can be found across numerous industries, from graphic design to construction.
For example, a web developer may work independently by securing contracts with various companies to build and maintain websites. This differs from traditional employment, where a worker follows a fixed schedule and receives benefits from an employer. Independent contractors maintain control over their work hours, tools, and methods, offering them significant flexibility. However, they also bear the responsibility of managing their own taxes and health insurance.
It’s essential to distinguish between an independent contractor and an employee; if someone is working under strict guidelines set by the employer, they might be considered an employee, despite the label of ‘contractor’. Knowing the difference is crucial, especially for HR managers who must navigate classification to ensure compliance with labor laws.
In the gig economy, independent contractors play a pivotal role, as they allow businesses to quickly scale their workforce without the long-term commitments typically associated with traditional employment. This model works particularly well for industries with fluctuating demand, like the service or retail sector, where businesses may require extra hands during peak times, such as holidays or significant sales events.
Independent Contractor: best practices
Clarify roles and responsibilities from the beginning to avoid confusion later. Set specific deadlines and deliverables in your contracts to establish clear expectations. Regularly communicate with contractors to ensure alignment and address any issues that may arise during a project.
Independent Contractor: common pitfalls
Avoid misclassifying workers as independent contractors when they meet the criteria for employees. Don’t overlook the importance of written agreements outlining terms, expectations, and payment schedules. Failing to maintain regular communication can lead to misunderstandings and missed deadlines, so keep the dialogue open.
How we can help
Zelos is a workforce management app that is tailored for optimal management of your independent contractors. It simplifies the process of tracking jobs, and provides a central platform for communicating with your talent pool.
If you’re looking to enhance your engagement with your contingent workforce, our deskless on-demand workforce management software can be an excellent choice. Sign up for a free account on our website to see how we can support you.