Employee vs. Contractor — Who Is Right for You?


Both permanent employees and freelance contractors offer unique benefits, so how do you decide which is right for your organization? This depends on a variety of factors; there is no clear answer. Let’s dig into why you might consider hiring one or the other, as well as the advantages of each.

Factors to Consider

Before you plan on which type of employee to hire, it’s important that you understand the decision-making factors involved in the process. Cost is likely your company’s first area of concern. Contractors and employees are paid differently, receive different benefits, and are bound by different contracts and laws. What’s appropriate for one business won’t work for another, so be sure to do the research and apply it to your company’s values, objectives, and desired outcomes for the role you’re filling.

Setting Your Priorities

While cost is obviously a primary factor, other things must be considered that will differ from company to company. Ask yourself how much difference there will be in employee engagement and how important that is to you. What about creating a corporate culture centered around teamwork — how do contractors fit into that equation? If your organization places little emphasis on these areas, you’ll reach a different answer than a company grounded in a team mentality.

Weighing Your Options

Like any important business decision, this hiring dilemma comes with pros and cons. If you’re looking for a magic answer, you’ll have to keep looking. No matter how you view it, each type of employment brings rewards and drawbacks, for both you and the person signing on. Job security, job flexibility, employment terms, benefits plans, travel, remote work, office space — all these go into the pot.

Some argue that contractors are king because of their low maintenance, flexibility, and reduced overhead. Others maintain that too many contractors can create a negative, disjointed structure with unclear boundaries.

In recent years, there have also been debates on whether a contractor is really a contractor by legal definition. Laws have gotten a lot more stringent over defining contractor roles versus employee roles. According to the IRS, if you want to have a lot of control over how a person does their job, you can’t hire them as a contractor, only as an employee. Contractors are given a scope of work with a desired outcome, but they are ultimately responsible for determining the method they will use to get the work done. This hot topic is certainly something to think about when weighing your options.

The Bottom Line

The great news is that your decisions on permanent employees vs. contractors don’t need to be set in stone. Start by drafting a proposal of what you feel is the best option. After that, make a decision and try it on for size. Start with shorter contract periods, around three or six months, allowing plenty of stops for evaluation along the way. Make changes as needed, or utilize both types of roles. Playing around with the nuances will give you the most insight into what truly works and makes the most sense for your business.

Author: Alisiana Peters

Alisiana is a senior marketing coordinator at HiringThing, an award-winning online recruiting software provider dedicated to changing the way businesses hire talent. Questions? Contact HiringThing Marketing.