Independent contractors, consultants, freelancers, contract workers, 1099 “employees,” and outsourced staff. All of these are titles used to refer to individuals who work for you but are paid outside of payroll. For small business owners and entrepreneurs, I always recommend hiring contractors (the generic name I will use for all the above) vs. employees whenever possible.
Why I recommend hiring contractors when possible:
- As an early-stage employer, you often don’t know the exact skills you need.
- You often can get better skills for your money with a contractor.
- You don’t have the same commitment to a contractor that you have to an employee.
Of course, you can’t just make anyone a contractor. How you classify and pay the people working for you is not totally your decision. The IRS has guidelines regarding who must be an employee vs. who can be an independent contractor, the Department of Labor (DOL) also has rules, and some states have even stricter rules. Misclassification of employees can result in fines, penalties, and major headaches. If you are unsure of whether an individual should be an employee or an independent contractor you can check with your tax consultant, attorney, or ensure you are in compliance by signing up for a free 30-minute assessment.
Even if, by law, you cannot directly hire a person as an independent contractor, you could make a hire through an employment or temporary agency. This could help you avoid some of the struggles most new business owners have when it comes to directly hiring employees.
For some businesses, independent contractors or freelancers are their primary workforce. This is often true for agencies that hire freelancers or subcontractors to step in to do specialized work. Do you have any of the following individuals working for you who are not paid on standard payroll:
A talent pool of independent consultants who are subcontracted through your company to do work for your clients under your company name and on your behalf?
Staff you use on a consistent basis that come from a secondary firm (staffing agency or specialty company)?
Small pool of freelancers you use as needed?
Outsourced services that are an integral part of your operation?
If you use contractors as your primary workforce the secret weapon only a few companies know is, having a handbook specifically developed for these independent members of your team yields big results.
So, what goes into a contractor handbook?
Here is a list of things you will want to include in your contractor handbook:
- A welcome letter from the CEO.
- Your mission, vision, values, and guiding principles.
- Details about your company culture and practices
- Answers to frequently asked questions
- Company specific information like where to park, how and when they can gain access to the building, and when certain events usually occur
- Any rules or regulations (policies) that also apply to the contractors. Many of your policies will not.
- Anti-discrimination and anti-sexual harassment policy
- Whistleblower procedures
- Complaint procedures
- Health and safety information (if applicable)
- A reminder that independent contractors exercise independent control in how they approach and complete a project and that they are responsible for obtaining and using their own tools and equipment to complete their tasks.
Do not add anything that would imply that they are employees, such as calling in when sick, work hours, a time to arrive at work, etc. You can put standard operating hours, but there cannot be any indication they are to abide by those hours. Any arrangements of work hours should be arranged individually and should be flexible.