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Freelance or Full-Time Employee: What's right for your business?

Posted by Kirsten Agnello-Dean on Mar 6, 2018 11:00:00 AM
Kirsten Agnello-Dean

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Need to hire some help? Not sure if you want to hire full-time or freelance employees?

Outsourcing certain jobs can save money and cut down on employee expenses, but it can also limit what can be done to the task for which you've contracted. 

So which one do you choose?

It can be a difficult decision which way to go, but never fear! We’re here to help. Let's weigh the pros and cons of both.

In Favor of Contractors

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A recent Freelancers Union study showed that 53 million Americans — a whopping 34% of the workforce — are now freelancing either as their main or supplemental income. "This population contributes $715 billion each year to the economy through their freelance work," Recruiter Box says. By 2020, 40 percent of the U.S. workforce is expected to be independent contractors.

So if you're thinking of going the freelance/contract employee route, you're not alone. Here's Artisan Talent's New York Managing Director Haris Silic speaking to Fox 5 NY about the freelance worker trend...

There are plenty of good reasons to consider going the freelancer (or contractor/independent contractor) route. Many people favor the bottom line when thinking of hiring freelancers — without having to put an employee on payroll, you can save money. 

Here are some reasons to favor freelancers:

  • Even if you must pay a higher hourly rate, you avoid paying for employee benefits, workman’s comp insurance, Medicare, or Social Security taxes.
  • Contracts spell out specific job requirements and deliverables. If contractors fail to deliver on the work, you can terminate them more easily than full-time employees.
  • Some jobs take specialized training and your employees may not have the skills you need in the workplace right at this minute. Training takes time and expense, but the right independent contractors will already have the training to complete the task.
  • Employees have certain legal rights, including minimum wage and coverage under other wage and hour laws. (Learn more from the Department of Labor here.)
  • Your workforce can expand or contract as needed without having to go to the time and expense of hiring, or the pain of letting employees go.
  • You get what you pay for — literally. Freelancers are judged solely by their output, the Huffington Post points out. "When they go out to get coffee or lunch, they’re not on the clock…so you don’t pay!"

In Favor of Full-Time Employees

Hiring Full-time Employees

Conversely, full-time employees provide some benefits freelancers can’t.

  • Employees can multi-task and work on a diverse number of projects beyond their basic job duties. They can be reassigned at any time to meet changing business needs. While this is sometimes possible with freelancers, it proves more difficult.
  • If your business needs to develop relationships to get or keep long-term business, you want employees that will be there for you long term.
  • Contractors work to fulfill a contract. Unless you’ve spelled out the terms, they work on their own time and hours. You will have little control over how the job is done or when.
  • A full-time employee is more invested in the company and more likely to contribute to the bottom line of the business, even if it’s something outside their area of responsibility. While a freelancer wants to keep you as a client, remember, your company’s individual success is not their priority. 
  • With more security than a contractor, employees may feel freer to take risks and try different approaches to getting the job done — which may lead to improvements in efficiency or innovation.
  • Employees may see a pathway to promotion, or greater pay, and may be more incentivized to go over-and-above the basic job responsibilities.

A Note About Classification

How to classify employees

Thinking "I'll just having everyone be a 'freelancer' but also work full time" will solve your problem? Not so fast. There are legal rules for exactly who classifies as a full-time or freelance employee. 

Basically, the amount of control you hold over a worker defines whether they can legally be classified freelancer or employee, Recruiter Box says. A growing number of lawsuits allege companies should not be classifying workers as free agents. 

CNN Money reports in its guidance, the Labor Department explicitly said the "economic realities" of the working relationship determine whether a worker is an employee, and those would override any agreement that may have been made between the employer and the worker.

If a company is found to have mis-classified workers as independent contractors, it may have to pay legal fees, back wages, back taxes, penalties, and damages, so make sure you're crystal clear on the laws in your area before you hire. 

What About Remote Workers?

Hiring Remote Workers

The "gig economy" and the rise of the candidate-driven market have made remote work more available and more popular. Contrary to some myths out there, freelance and full-time employees can and do both work remotely off-site either part of the time or all of the time.

Recruiter Box says:

Over the last decade the gig economy has transformed the way we work and do business in America. Access to remote work has changed the definition of work and workplace dramatically. More and more people are working from home or off-site, and more and more people are working as consultants or contractors. 

While remote work can be scary for employees, an important tip to remember is if your worker force is remote, you reduce the need for office space and can lower your office supply costs dramatically. Furnishing your office building by providing physical space, desks, proper technological equipment (laptops, phones, etc.) all adds up quickly.

Another way remote work makes your finance department happy? More productive work and less wasted time. Huffington Post shares that it’s no surprise U.S. employers spend $759 billion each year on work that’s not actually done. Countless meetings and water cooler talk "are serious problems that plague many workplaces," that are drastically reduced when you have a remote workforce.

Which Way to Go?

Should I use a temp agency?

Making the right decision depends on the job and what you’re trying to accomplish and your overall business goals.

Entrepreneur suggests looking at these three factors when deciding which way to go: 

  1. Cost
  2. Turnover
  3. Engagement

And ask yourself these questions:

  • Are you looking for a specialized worker or someone with a more general skill set?
  • How will your needs be different a year from now?
  • What does your cost structure look like?

Don't forget, as with most decisions, there’s no one right answer and you need to consider all the various factors. If this seems like a lot, don't panic. 

A temp agency staffing partner can help you make the decision and show you some qualified candidates, both freelance and full-time.

If you would like more information or want to talk to a professional that can help you make the best decision, feel free to reach out to us and let us help...we know some great people! 

Help Me Hire Talent 

 

Other Posts You Might Like

5 Reasons to Use a Staffing Agency

Tips for Approaching Freelances about Long-Term Projects

The Hiring Freelancers Guidebook

Transitioning from Full Time to Freelance

 

Tags: Freelance Resources, Hiring, Employer Resources, Staffing

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