When hiring professionals as independent contractors, there a few things to consider before signing the dotted line. Whether you are hiring for a short-term project or looking for a freelancer to assist your organization long-term, a poorly executed engagement and cause problems down the road. We have created an independent contractor vs employee checklist below to ensure you reduce the risk of hiring an independent contractor vs a temporary employee.
To avoid misunderstandings and potential conflicts, it is important to make the working relationship as clear as possible. The distinctions between independent contractor vs temporary employee can cause confusion and subject to regulatory changes depending on your location. Not least, your organization can face risk in terms of fines and penalties.
Reduce The Risk With Our Independent Contractor vs Employee Checklist1. Put it in Writing
A critical aspect of hiring contract workers is to clarify the business relationship from the get-go and align on mutual expectations. Capturing the details of your agreement in writing in a “contract for services” will provide a good foundation for the business relationship between you and your contract worker. While verbal commitments may be enforceable depending on the circumstances, a well-defined agreement outlining cost, deliverables, and payments is instrumental to avoiding misunderstandings.2. Project Management
When hiring a independent contractor vs temporary employee, a formal Statement of Work (SOW) is usually provided, which helps set a framework for the project. This includes the contractor’s details, such as name and contact information, as well as their rates, and start and end dates. Next, you will want to establish a clear line of communication with the contractor, schedule regular meetings, or use a project management tool to keep track.3. Employee Agreement
Create an Independent Contractor Agreement and have it carefully reviewed by your legal team ensure that it follows legislation in your region. It is important to clearly establish the rights of the contractor to perform services for other parties for the duration of the agreement, and whether work may be subcontracted. In some cases, it may be necessary to bring the contractor onboard as an employee, which is a why an Employee Agreement may become relevant as well. Adjust the onboarding plan according to the status of the contractor.
Below we have listed two examples of an independent contractor vs employee checklist. Keep in mind, that items may vary based on federal, state/provincial tax, and labor laws in your regions
EMPLOYEE (T4/W2) CHECKLIST
- Job description
- Employment Agreement w/ resume
- Federal, State/Provincial Tax Forms
- Corporate Employee Handbook
- Copy of Policies and Procedures
- Payroll Forms/Direct Deposit
- Background Check Authorization
- Expense Reimbursement Forms
- Time Sheet/Entry Instructions
INDEPENDENT CONTRACTOR CHECKLIST
- Statement of Work (SOW)
- Independent Contractor Agreement
- Articles of Incorporation or Business Registration
- Proof of Various Insurances
- Payment information for business bank account
- Expense Reimbursement Forms
- Invoicing Procedures
In summary, there are a lot of factors to consider when engaging independent contractors vs temporary employees. Mistakes can be costly, which is why we recommend a thorough review of your processes, documentation, and compliance procedures. In many cases, it can be beneficial to consult with an expert third-party to ensure that your hiring process is up to industry and legal standards. Before getting started, you may also want to consider the time and cost that your department will spend on this process.
Consider a Workforce Service Provider
HCMWorks helps organizations gain better access to talent using independent contractors, consultants, temporary workers, freelancers and other non-payrolled employees. As a contingent workforce provider, we provide expertise, technology, and processes that help businesses reduce their workforce costs, mitigate against misclassification and co-employment risks, and increase the efficiency and timeliness of your contingent recruitment process. Learn more about working with HCMWorks here.