The Difference between Freelancers, Gig Workers, and Temporary Employees
Even though the U.S. unemployment rate is reaching historic lows, and employers are struggling to find workers for their full-time roles, the gig and freelance economy continues to loom large in our collective consciousness.
Since it’s hard to find the right talent for your open reqs, should you be turning to freelancers, gig workers, and temporary employees to fill in the gaps? Here’s what you need to know before you start hiring on-demand talent and temporary employees:
A freelancer is an independent worker who essentially runs their own business. Freelancers are responsible for their own marketing, billing, and communication; they are both CEO and front-line worker.
You can typically find freelancers in the knowledge work industries – from software engineering to copywriting and graphic design. Freelancers set their own rates, and there are no real set-in-stone standards for pay rates – and because freelancers don’t get benefits or a salary, their rates may actually be much higher per hour relative to a salaried employee.
Freelance workers are great for when you need specialized help on a short-term or ad-hoc basis. It’s up to you and your department to make sure that you handle communications and billing in a timely fashion, however – because freelancers often live paycheck to paycheck, especially those in the creative industries, it’s up to you to make sure that they are paid on time!
Freelancers receive a 1099-misc form if they earn more than $600 from you in one year.
Looking for freelancers? Because this is a decentralized industry, you may have to do some digging. Google searches often turn up the workers with the best SEO, but not necessarily the best fit; you may want to turn to informal networks, like the Binders, or else to websites like Upwork, where you can compare freelancers based on ratings and rates. And, of course, referrals are your best bet, as many of your employees may have friends and family members who are freelancers – and whom they know are reliable, responsible, and capable of quality work.
Gig work is technically freelance; however, a “gig,” as it’s defined today, is usually mediated through a specialized app or platform. Gig workers are classified the same way as freelancers – they’re earning money independently – but they do not entirely run their own business. Their marketing is usually done for them via the company that runs the gig platform, and jobs are often routed to them at random.
Take Uber, for example: an Uber driver is responsible for providing a car, paying for gas, doing maintenance and upkeep on the vehicle, and doing the work of driving passengers to their destinations, but that driver does not get to decide on their rate, whom they pick up, or how the company markets their service.
Traditionally, you’d hire a gig worker to do a task for you – deliver lunch to the office, pick your boss up from the airport, haul boxes, etc. – but over the past several years, companies have taken gig work to the next level. Now, with the advent of platforms and apps for every industry and job level, there’s a fuzzy line between gigs and freelance. You can find someone to code your next digital product or offer expert advice based on their doctoral dissertation. In those cases, both gig workers and your organization have some control over whom you work with.
The main difference between gigging and freelance is that gig work, because of the ways in which the platforms are built and the companies that run them are structured, tends to drive the price and the profit to the worker down. That means you might get a better deal working with a gig worker, but the workers themselves often make much less than a traditional freelancer because there’s another company taking a cut of their earnings. While this is cost-effective, it may also mean that you’re compromising quality for price – and because anyone can sign up for a gig platform (in most cases), the marketplace is crowded with low-skilled people who are willing to do mediocre work for less than their higher-skilled peers (and they are often rewarded for it, to the detriment of both the higher-skilled workers and those who end up paying for their services).
Gig work, like freelance work, is largely unregulated, so you have to rely on other people’s ratings as a guide to choosing the best workers for your jobs – if you have a choice at all.
Between full employees and freelancers, temporary workers offer you the best of both worlds. Temp work is often engaged through a staffing agency, where knowledgeable recruiters work with both the hiring manager and the candidates who apply to understand both need and fit.
Because temporary hires are made through the staffing agency, and temporary workers sign up to work for the agency, workers have a little more protection – and hiring managers have better control over rates. And since payments are made through the staffing agency, you don’t have to worry about submitting invoices at random points in the pay cycle and following up when the contractor doesn’t receive payment on time – they just get paid on time!
Temp workers run the gamut from highly specialized knowledge work to manufacturing and warehouse roles. What separates them from freelancers is the intermediation of a staffing company during the hiring process and throughout the employee’s tenure with the company. What separates this from gig work is that the employer has a choice – and the staffing company does due diligence in reviewing resumes and suggesting the right candidates for each role. With a staffing agency, unlike with freelance and gig platforms, workers are also subject to drug tests, reference checks, and skills training, which means that those candidates who are ultimately presented to your hiring managers have been vetted.
When to Use On-Demand Talent and When to Work with a Staffing Agency
While technology, globalization, and the changes in employment models continue to blur the lines between different types of independent workers, you can still make informed decisions about when to use freelancers, gig workers, and temporary employees:
- Are you looking for someone to perform a one-time task, especially one that doesn’t have high stakes or require special skills? Use a gig worker.
- Are you looking for someone to perform tasks on an ad-hoc basis, with whom you can engage quickly and pay as needed? Use a freelancer.
- Are you looking to fill a necessary role in your organization, whether short- or long-term, and want to control for candidate quality and fit? Use a temporary worker.
You can learn more about the different types of on-demand platforms that exist in our recorded webinar with Sean Ring of Fulcrum – and when you’re ready to work with a staffing agency to find great temporary employees, get in touch with Nelson!