Red flags in Hiring Independent Contractors
Every company wants to grow. The bottom line for the creation of any business is profit. Profit is a result of growth. A company that is not growing will not make a profit. Profit can be of any kind and not just in financial terms. No matter your definition of what profiting might be, you need a team that will help you achieve your goal. This team can be in form of your employees or contractors. Contractors are also part of your employees, however, they are not your legitimate and long-term employees. And that poses the question, who are contractors?
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What is meant by Independent Contractor?
Contractors or independent contractors are highly but independently skilled professionals that work for an individual, company, or organization for a certain period in the execution and completion of a particular task or project. Independent contractors are sometimes referred to as freelancers who are not necessarily full-time employees of a company but are hired to work on a particular project for a specific period. Contractors work based on the contracts between them and the employer. They are paid at hourly rates, after each milestone, or after the project. Contractors work independently as an individual or agency and they are highly skilled in their trade. They are self-trained and can work independently without supervision and the company’s resources.
Flipping through all these perks, it’s easy to assume that independent contractors are a safe haven for companies wishing to hire talents for their businesses. However, as advantageous as these contractors are, some important red flags must be considered when hiring them. In this post, we’ll walk you through the significance and the dangers associated with hiring independent contractors.
Significance of Independent Contractors
With an independent contractor, you can be assured of flexibility. They work flexibly with and work for you and also provide you the opportunity to work flexibly with them. Working with independent contractors assures you that you can execute projects in any way you like without necessarily thinking about time and resources. You can work with contractors knowing fully well that your contract and relationship are done with them as soon as the work is completed. Thus, you don’t have to worry about certain expenses, time, resources, or legal actions. Furthermore, since independent contractors have sufficient specialty in their trade, employers don’t worry about providing intensive training or supervision for them. Thus, energy can be channeled in another direction.
Reduced Expenses and Resources
Just like flexibility, employers tend to enjoy the reduction in expenses and resources while working with contractors. The cost of hiring and managing employees over a long period is more than the cost of hiring and managing short-term contractors. With employees, you are obliged to pay salaries according to the agreed time, manage their taxes, provide the required benefits and compensation, be responsible for their legal compliance, provide adequate training and supervision, provide the resources for every project, etc. All these responsibilities will cost you several thousand or millions over time. However, with independent contractors, you don’t have to worry about taxes, resources for the project, training, supervision, etc, and thus, there won’t be any need to spend so much money on such responsibilities.
Productivity most times is a function of time and efficiency. This is something companies might not enjoy completely with their full-time employees. However, independent contractors bring a whole lot of energy and productivity to your business. Since they have a deadline to meet, they probably have other clients they are working for, and they have the technical requirements for the job at hand, they tend to execute and complete the job easily and quickly. Although employees work with deadlines and the available resources, the consciousness of productivity is more expressed in the personality and works of contractors.
Red Flags Associated with Independent Contractors Recruitment
Classification of Independent Contractors
Workers’ or employees’ classification is one of the most important factors that must be considered when hiring independent contractors. This is a factor that can mar the growth and reputation of a business no matter the level you are. Thus, it is important for companies to rightly and correctly define the employee and employer relationship and the independent contractor and employer relationship in their workplace before dabbling into hiring. Misclassification of contractors as employees or employees as contractors can heap unfavorable legal actions and penalties on companies. At a time, Uber was sued for misclassification by its drivers due to the company’s management pattern of the workers. Thus, proper classification is the antidote to the impending doom that can be caused by employee misclassification.
To overcome this, companies must ensure they are 100% compliant and that they understand the definition of independent contractors in the region they are carrying out their business. Furthermore, employers must expressly define their employer-employee relationship with their potential talents before entering into a deal with them. Also, the terms and conditions and other terms provided in the contract of employment must be correctly understood by the two parties involved. The contract should express the workers’ obligations to the company, work duration, responsibilities, working conditions, control and supervision, the significance of the employer to task execution, payment mode, and frequency, etc. While these concepts have been clearly expressed and defined in a contract, following them to the latter once the contract is in place is also important.
Previous Performance, History, and Reviews
Reputation is very key in business. It is what people think of a person or business. A stained reputation will not likely bring opportunities and success. It only takes a bolder move to work with someone or something that has a bad or stained reputation. Thus, reputation is a factor that must be considered during the hiring of independent contractors. Before confirming the recruitment of any contractor, it is very important and compulsory to confirm their reliability and integrity. It is important to make a quick and explicit background check on their work history. Confirm if the documents they are submitting are correct, who are their previous clients, what do their past employers have to say about them, who are their colleagues or partners and what do they have to say about them, what qualifications do they have, what training have they undergone, who trained them, how long have they been in the business, what are the general ratings and reviews about them, who are likely to recommend them and what are they recommending them for, how trustworthy and reliable are they, what is their average delivery time, how well do they relate and communicate with their clients? These and many more questions must be asked before confirming the recruitment of a contractor. The ability to identify the red flags during this extensive research will save the company from recruiting contractors that will probably bring harm or downtime to the company or its projects.
Contracts and Terms of Service
Most times, your seal of employment with a contractor is always in form of a contract. Employees use employment letters but contractors are known to work majorly with contracts and terms of service or terms and conditions. While employing a contractor, employers are enjoined to diligently prepare a written contract. In no circumstance must any of the terms be assumed. Assumed terms of service pose a great danger to the reliability of a deal. Thus, employers must ensure that every agreement, condition, and terms of service must be made available in written formats. When contracts are not properly or completely written, employers or the independent contractors themselves may use the loopholes as an opportunity to cause issues unnecessary to the agreement. Furthermore, contracts being in written documents is not the only solution or red flag that must be attended to during contractors’ recruitment. Understanding all the terms of the agreement is another important factor. It is more catastrophic if after writing and signing a contract, a contractor goes out to work outside the terms of the agreement based on not understanding what the contract has indicated. Thus, employers must ensure that the contractor understands every clause and article in the contract before the appending of signatures.
Control and Managerial Issues
Before you hire an independent contractor, you must understand that they are somehow difficult to manage. While working with a contractor, try as much as possible to drop your ultimate control or authority personality in your office. Independent contractors are considered to be experts in their trade and they have almost everything they need to execute the job, thus they are not keen on needing any supervision whatsoever. If they need any help, partnership, or support, they will seek it from you or anywhere else. As an employer, your employees are the ones that are legally and directly subjected to your Supreme control. If a contractor is subjected to your control and supervision, it will be clearly and expressly stated in the terms of service. Any attempt to exercise control or supervision that is not started in your terms of service has the potential to stand against you legally. Independent contractors can sue any employer that tries to exercise authority over them or coerce them into participating in an activity or responsibility they were not originally recruited for. Thus, dealing with contractors requires a whole lot of patience and meekness but with an eye for quality. Not exercising authority over contractors doesn’t mean that you will have to leave them to do what they want to do, carry out the task anyhow, or just do anything. No! A channel of supervision, communication, and feedback must be established between the contractor and employer to communicate work progress and keep the employer abreast with the contractors’ activities. This will also help the employer to put the contractor in check and balance to see if they are working according to the terms of the agreement, governmental obligations, and within the company’s policy and regulations.
Loyalty and Intellectual Property Rights
One of the major drawbacks and red flags associated with independent contractors is a lack of loyalty. You can’t guarantee the loyalty of a contractor during or after their contract with you. They might place your work on low priority and focus on another client’s job. Loyalty is very easy to control in terms of employees but it is quite a complication with contractors. They can stop your work at any moment, deliver substandard deliverables, procrastinate, or sell your ideas to competitors. They can make some important details of your company available to third parties. Your intellectual properties that are used in driving your business become complicated when dealing with contractors. In an ideal employment situation, employees must accrue all intellectual property rights to the company during the execution and completion of a task or business. However, with contractors, it is not easy for employers to assume all the copyright or ownership of the work after its completion because contractors can go on to calm ownership. Even if the intellectual property rights have been expressly defined in the contract, it is not so easy for employers to still control the usage of the work done by contractors.
How WeHireGlobally Can Help
This article has completely opened your eyes to see an amazing significance and the endangering red flags that are associated with hiring and working with independent contractors. Contractors bring high-level leverage and opportunity to your work and your company. However, their hiring, management, and relationship are surrounded by some dangerous red flags and complexities that can bring stains on the good reputation of your company. Thus, it is very important for companies that want contractors for their projects to tread carefully along the path or use other options. WeHireGlobally is another but very reliable option that employers can leverage while hiring and dealing with independent contractors. With WeHireGlobally, employers have access to a large pool of talents from over 150 countries across the globe with any type of skill. Partnering with us assures you of 100% compliance, safe management of contractors, risk mitigation, management of payroll taxes, and contracting. With us, you don’t have to worry about any of the red flags mentioned in the article but you will be positioned to enjoy the benefits of your employees.