Contractors vs. Full-Time Employees: How to Know Which is Right for the Position

It is a common question: “Should I hire a contractor or full-time employee?” The answer really comes down to simply what kind of help is needed. Many small business owners start out by hiring outside contractors to do work for them, but at some point, they may decide to bring on a full-time employee or two. Once the positions’ specific needs and expectations are clear, then the decision can be made.

Certain situations and positions are best filled by independent contractors, while others are better for someone full-time. However, there are certain legal considerations that come with both, so be sure to obtain staffing insurance solutions (particularly EPLI) and understand the requirements for both forms of employees. 

Hiring Full-Time Employees

An employee is a person who works in the service of another person under an express or implied contract of hire, under which the employer has the right to control the details of work performance. 

When an employer hires an employee, they are able to completely control and direct that person’s work on the clock, to train the person in the way they want the job done, and to require that person to work only for them. Also, there are few restrictions on what the employee can be assigned. 

Hiring a full-time employee should be considered if:

  • Work must be done under precise supervision
  • Control over the hours of work and the tools and equipment used by the worker is needed 
  • This is a long-term need 
  • The work is essential to the business and not a peripheral job

Hiring Independent Contractors

One may assign duties to an independent contractor and impose a deadline and work product, but cannot tell that person how to get the job done. An independent contractor is free to work for others, set his or her hours of work, and often provides his/her own tools. Certain companies may greatly benefit from the fewer reporting and payroll responsibilities for independent contractors. 

Independent contractors come in handy when work is:

  • Not central to the business; for example, cleaning the offices or running a computer system is outside the scope of the business mission
  • Able to be done by a professional who doesn’t need much supervision
  • A short-term project that will be completed in a defined period of time

The decision to hire a worker as an employee or independent contractor is done on a case-by-case basis.

About World Wide Specialty Programs

For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage, we have available to protect your staffing business, give us a call at (800) 245-9653 to speak with one of our representatives.