What is an employee?
- are eligible to receive benefits,
- only work for one company,
- are given training,
- and do not have to provide tools or a workspace.
An employee signs an Employment Contract after accepting an offer from a potential employer.
What is an independent contractor?
Consultants, freelancers, and contractors sign an Independent Contractor Agreement after negotiating terms with a client.
What type of hiring contract should I use?
- Job title and description
- Whether the employee will need to pass a probationary period
- How often the employee will be paid, and how much (salary, hourly, commission, etc.)
- Vacation time, work hours, and overtime
- What (if any) confidentiality, non-solicitation, or non-compete clauses will cover
Independent Contractor Agreements
- The duration of the contract
- A description of what services the contractor will provide to the client
- Details about the freelancer and the business or individual hiring them
- How much the contractor will be paid and when
- If there will be a deposit on the work, and what happens if a client pays late
- Information about expenses and intellectual property
The pros and cons of hiring employees
- They are more likely to be a part of the team and the office environment.
- They typically receive consistent, long-term paychecks which is good for the worker and can be less costly for an employer than hiring a contractor.
- They can assist where needed, helping to grow their experience in different areas.
- Having job security makes employees more likely to stick with a business long-term.
- Employers are able to exercise more control over things like hours, wages, and deadlines.
- Vacation time. Employers will need to provide it, and employees will be restricted to taking it when an employer allows.
- Salaries. Employees may cost more over time than a contractor because of things like vacations, overtime, and benefits, although contractors tend to charge more per hour or per project than what an employee would receive.
- It is easier to end a contract with a client or freelancer than with an employee or employer.
The pros and cons of independent contractors
- Short-term contracts. If, after a project is complete, either party doesn’t want to continue working together in the future, there is no obligation for either the freelancer or the client to sign another contract.
- They tend to specialize. This is great for clients as they get an expert’s advice where they need it, and freelancers are able to focus on what they do best instead of generalizing.
- They don’t cost overhead for the employer and contractors can choose their own hours and workspace.
- Contractors often take clients on a first come, first serve basis. That means that the employer and contractor may not get to work together in the future.
- Consultants aren’t part of the staff, so they may not be as knowledgeable about the product or service as a long-term employee would be.
- Because contractors work for themselves, they can be more selective about the projects that they take on.