We hear a lot of confusion about the legal status and employment options for temporary workers, contractors, freelancers, and reporting requirements for each. They may all sound similar, but they have legal definitions with big ramifications for your business.
What is a temporary worker vs. contractor vs. freelancer?
The Department of Labor defines a temporary employee as someone expected to work with a company for less than a year. This requires a specific “expiration” date and are often seasonal jobs, like construction or retail. Within On Demand Staffing, we hire workers to help clean and maintaining short-term venues — like the Indiana State Fairgrounds — and during seasons, like football season when stadiums are used heavily.
The notion that temporary labor is just for low-wage jobs or low-skill jobs is untrue. Medical, creative services, human resource, and administrative jobs are turning to temporary labor. There are many reasons, but the biggest is a tightening job market where employers are finding it more difficult to find qualified long-term applicants. Temporary labor allows employers to trial workers to make sure both sides are receiving a good fit. Internal departments may find temporary workers helpful in crunch periods — like tax time or the holidays — or using a temporary staffing company like us when they’re unable to find the right people.
A contractor and freelancer are frequently the same thing. But the difference between a contractor and a temporary worker are different. Contractors are usually skilled in specific areas, like accounting, payroll, programming, and many other specialties. Contractors, by law, set their own hours, supply most or all of their own equipment like a computer or car, and do not receive benefits or pay unemployment taxes. Employers must report compensation of $600 or more to the IRS.
Temporary labor, however, is treated more like a typical employee. They may be provided some benefits, get a schedule set by the employer, and pay unemployment and workers compensation benefits. The full gamut of benefits they are entitled to vary by state. At On Demand Staffing, we handle all the tax reporting, benefits, and scheduling for employers.
Is a temporary worker cheaper than an employee?
Temporary workers are always more affordable than full-time employees on an annual basis. Assuming you’re hiring workers for more than a week or two, you’re likely to see significant savings.
There are also recruitment costs that extend beyond wages and benefits. To hire a worker you’ll need to post the job ad, filter through an average of 200 or more resumes, possibly pay for branded material like business cards, attend job fairs, on board the employee with an orientation, and train and educate the worker.
A bad hire can set an employer back a significant chunk of time and money, not to mention the lost productivity only to end up at the same spot you were in before you made the hire.
If you need help or have questions about hiring a temporary labor company, find your nearest On Demand Staffing office.