What is a Contingent Worker Meaning?

Contingent workers are independent contractors who are people who lend their skills and expertise to a business on a project-by-project or short-term basis. A contingent worker is someone who works for an organization without being hired as their employee.

What is a Contingent Worker?

Contingent workers are typically freelancers, independent contractors, consultants, or other outsourced and non-permanent gig workers who are hired on a per-project basis. Companies do not hire contingent workers as employees. Rather, contingent workers offer their services as contract work, either temporarily or as needed.

Employers often hire contingent workers to help with a specific project instead of hiring an employee for a permanent workload. Based on these differences, contingent workers trade benefits and full-time salaries for variety, freedom, and the ability to work on projects they choose.

Our workforce is full of examples of contingent workers, including:

Independent contractors
Consultants
Freelancers
Temporary workers employed by staffing agencies or other third parties

Contingent workers often work remotely from anywhere they like.

What is the Advantage of Being a Contingent Worker?

One of the advantages of contingent workers is the speed at which you can get them on board. Another positive aspect of contingent work is that it can provide you with exposure to a new field you might be interested in. The two biggest benefits to using contingent workers over core employees are flexibility and cost savings.

Contingent workers enjoy many advantages over other employees, both financial and project-related. In addition, many companies find that hiring contingent workers offers them excellent advantages.

Here are some of the advantages that contingent workers, and the companies that hire them, enjoy:

For Workers: The Ability to Access Unique Skills:

Employers usually hire contingent workers for special projects requiring skills that no company has. For example, if a small business wants a new website, it may bring in a contingent worker with the skill and experience to build company websites.

For Companies: The Ability to Adjust

Companies that hire contingent workers do not have to commit to hiring multiple new full-time employees. Instead, they can accomplish things using contingent workers and then decide on-the-fly if they want to offer the contingent worker another contract.

For Workers: The Ability to Experiment

Contingent workers have various skill sets, and their flexible schedules allow them to try out different talents and see what they enjoy doing. Instead of becoming locked into a two-year contract, for example, they can work in one capacity for a month and then move on to try something else.

For Companies: The Ability to Save Money

Companies who hire contingent workers owe them their agreed-upon rate. However, they do not have to provide benefits, pay overtime, or provide bonuses. Plus, companies do not have to pay for employee training since contingent workers are typically already experts in their field.

For Workers: The Ability to Make Money on Their Terms

Many contingent workers have figured out what schedule works for them, how much money they need to make to pay their bills, and how much time per week they want to work. When these concepts come together successfully, workers enjoy profitable careers that perpetually challenge them. Many contingent workers are artists, photographers, writers, and musicians, and they allow time in their work schedules to pursue these passions—or they work in those fields when they can.

For Companies: The Ability to Pay Less in Taxes

Just like independent contractors, contingent workers do their taxes. However, employers need not deposit payroll taxes or withhold certain amounts; they do not have to worry about matching contributions for things like Medicare. Instead, companies only have to send a 1099 to any worker who made more than $600.

Is a Contingent Worker an Employee?

The easy answer to the question “are contingent workers just employees?” is “no.” However, the true answer is a bit more complex.

Some employers wrongly classify their employees as contingent workers, but in California, strict laws protect workers from this wrongful practice.

However, even well-intentioned employers often grow confused when classifying contingent workers for tax and payment purposes. This list should help employers understand what factors they should consider. The US Supreme Court Judges ask employers to make a sound decision based on the following questions:

Are the services rendered an essential part of the company’s operations?
Is the relationship with the employee permanent?
How much has the worker invested in equipment and other costs, such as materials?Is the worker under the employer’s control?
What are the worker’s opportunities for profits? For loss?

Why Are More Companies Today Relying on Contingent Workers?

More companies today choose to use contingent workers because more are available in the workforce. So the real question is: why are there more contingent workers today than ever?

Being a contingent worker does not work perfectly for everyone, but successful people have figured out how to make their limited role work for them. Many contingent workers work fewer hours than salaried workers and make a similar amount of money. Some contingent workers make more money than salaried workers. Combine the ability to work less and make more money with increased freedom, and it is easy to see why being a contingent worker is popular.

Becoming a contingent worker is not for everyone. Many contingent workers value job independence and freedom from a monthly or yearly routine above everything else. These unique workers also want to pursue their passions and choose the projects they find appealing. Finally, contingent workers can make decisions on how they complete their work. Meaning there are no supervisors to micromanage contingent workers, which is why they like it.

How Can a Business Attorney Help?

Contingent workers are an excellent addition to the workforce for busy companies and talented workers. However, they also create unique challenges and questions for many companies interested in hiring them.

At Nakase Wade, our California business attorneys and corporate lawyers can help provide sound advice regarding hiring contingent workers. Our experienced team is well-versed in California labor law and aware of the state’s new regulations.

We will protect your interests and ensure that your company is correctly hiring, paying, and taxing contingent workers. Contact us for a free consultation today.

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