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Pros and Cons of Using Independent Contractors

Operating a company in today's business environment means addressing a myriad of challenges that can sometimes threaten to overwhelm a business. Depending on the size of the company and its potential for growth, challenges such as acquiring operating capital to expand and continuing to provide increasingly expensive benefits to keep the best employees are issues that never really go away.

These challenges, especially providing incentive packages for employees, are leading certain businesses to explore more productive and efficient ways to operate their companies such as integrating independent contractors into their workforce where applicable.

Are Independent Contractors for You?

The real question business owners and managers need to address, other than the legalities of hiring independent contractors instead of employees, is whether or not there is a real benefit to the company by bringing in an outsider to perform certain tasks within the company.

As detailed in this account by Brazen, the general rule of what an independent contractor is, according to the IRS, is when the payer has the right to control or direct only the end result of the work and not how it is accomplished. In other words, independent contractors cannot be regulated by the company in any way other than being tasked to complete a specific job.

Contractor Management Tip

Before integrating an independent contractor into the workforce, make sure you clearly detail what is required of them and inform them of any deadlines. How they complete the work and when cannot be dictated by the company, so this can sometimes cause issues if not properly understood.

Be Cautious of Creating Animosity

There is also the issue of having employees feel resentment toward independent contractors handling certain tasks within the company according to their own schedule and terms. It is possible to have animosity develop over this type of business relationship. Companies must also be aware that even though employees can be asked to sign a non-compete agreement, independent contractors cannot because legally, a company cannot impede an independent contractor from operating their own business. It is wise for companies to ask a contractor to sign a non-disclosure agreement, however, in the interests of keeping sensitive information within the company.

Will Your Sensitive Information Be Safe?

This scenario forces the true question of the benefits and disadvantages of hiring an independent contractor. If the task that the contractor is performing requires the secrecy of a non-compete clause or a non-disclosure agreement, is it a good business decision to allow a non-employee to be tasked with that responsibility? This, of course, can only be answered by the particular company. There are many sensitive tasks performed by independent contractors all over the country every day, but as pointed out by, each business is different and must weigh the pros and cons of hiring an independent contractor over a permanent employee.