What Are the Pros & Cons of Contract Labor?

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The use of independent contract staff as opposed to permanent employees is becoming increasingly popular. There were approximately 1.2 million temporary staff employed in 2005, according to the Bureau of Labor Statistics. There are many pros to the use of contract labor in a company, but it also has its drawbacks.

Pro: Staffing Flexibility

  • There may be certain positions whose futures are unsure. Hiring a contractor to fill the position for a particular time frame is a good alternative to hiring someone permanent if you are not certain of the position's stability. Independent contractors are also useful for companies that have fluctuating workloads and need short-term staff to help out for a specific project. Once the contract term is fulfilled, there is no obligation for either party to continue the relationship.

Pro: Trial Evaluation

  • If your company has a permanent position available, but you want to evaluate a potential employee first, you can hire him on a contract basis. This will enable you to assess the person's abilities and skills to see whether he measures up to your standards. If you're unsatisfied with the contractor's performance, you can simply choose not to call him back for future work. If, however, you're happy with the work done, you can offer to hire that individual as a permanent employee who is already trained for the work.

Pro: Reduced Costs

  • The cost of hiring temporary contract workers is a lot less than hiring an employee. Most temporary workers are not provided with company benefits such as health insurance, and you do not have to pick up a share of Social Security or Medicare taxes or pay for worker's compensation or unemployment insurance. Also, in many cases, contract workers have their own equipment to do the job they're contracted for and don't need company office space.

Con: Less Control

  • Independent contractors often have their own way of completing tasks which may differ from the way your work is carried out. You can not supervise them as closely as you do employees or exercise as much control. Using contract workers may also result in a varying quality of work you receive on projects where different individuals have been hired.

Con: Safety Issues

  • Safety is always an issue, but even more so with temporary workers whom you have not trained, and therefore may not have been taught all the required safety practices and procedures to complete the job. Since independent contractors are not covered by worker's compensation in many states, you may be liable for injuries the contractor suffers and could possibly be sued for damages if there is carelessness on your part.

References

  • Photo Credit Thomas Northcut/Photodisc/Getty Images
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