Types of Temporary Employees
Even though the U.S. unemployment rate has reached historic lows, and employers still struggle to find workers to fill 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 positions, you may wonder if you should consider freelancers, gig workers, or temporary employees to fill in the gaps? To help you decide which type of temporary employee is right for you, here’s what you need to know about each of these employee categories.
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 the CEO and front-line worker.
You can typically find freelancers in the knowledge work professions, including software engineering, copywriting, and graphic design. Freelancers set their own pay rates, and there are no set-in-stone standards for how much freelancers charge. Remember that freelancers don’t receive–and therefore have to pay out-of-pocket for–benefits such as health insurance, retirement plans and worker’s compensation. A freelancer’s hourly rate may therefore be higher than that of a salaried employee.
Freelance workers are great for when you need specialized help on a short-term or ad-hoc project. It’s up to you and your department to ensure you handle communications and billing in a timely fashion. Since freelancers often live paycheck to paycheck, especially those in the creative industries, it’s up to you to make sure they are paid on time!
Freelancers receive a 1099-MISC form if they earn more than $600 from you in one year.
If you are looking for freelancers, remember that freelancing is a decentralized industry, and you may have to do some digging to find the right match. Google searches often turn up workers with the best SEO, but not necessarily the best fit for you. Instead, you may want to turn to informal networks, like the Binders, or websites like Upwork, where you can compare freelancers based on their ratings and rates. 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 work; however, a “gig,” as it is defined today is usually mediated through a specialized app or platform. Gig workers are classified the same way as freelancers. They earn money independently but do not entirely run their own business. Their marketing is typically done for them via the company that runs the gig platform, and jobs are often routed to them randomly.
Take Uber, for example; an Uber driver is responsible for providing a car, paying for gas, maintaining the vehicle, and driving passengers to their destinations. However, that driver does not get to decide on their own rate, who they pick up, or how the company markets their service.
Traditionally, you would hire a gig worker to do tasks for you such as delivering lunch to the office, picking your boss up from the airport, hauling 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 is a fine line between gig and freelance workers. 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 the two types of work is that gig work is tied to the parent company’s structure and how their platforms are built. These factors tend to drive down the price and therefore the worker’s profit. You might get a better deal working with a gig worker. However, these workers often make much less than a traditional freelancer because the parent company takes a cut of their earnings. In most cases, anyone can sign up on a gig platform, and the marketplace is crowded with low-skilled people who do mediocre work for less than their higher-skilled peers. Lower-skilled individuals are often rewarded for this to the detriment of both the higher-skilled workers and those who end up paying for their services.
Gig work, like freelance work, is mostly 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-time employees and freelancers, temporary workers offer you the best of both worlds. Temp work is often engaged through a temporary staffing agency, where knowledgeable recruiters work with both the hiring manager and candidates who apply to understand both the need and fit.
Since temporary employees are hired through the staffing agency and temporary workers sign up to work for the temp agency, workers have a little more protection and hiring managers have better control over their rates. Since payments are made through the staffing agency, you should not have to worry about submitting invoices at random points in the pay cycle and following up when the contractor does not receive payment on time – they just get paid on time and reduces the workload for internal human resources.
Temp workers run the scale 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 temp workers 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, temporary staff 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 evaluated.
When to Use On-Demand Temporary Staff and When to Hire Through a Temporary 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 requires specialized 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 or independent contractors.
- Are you looking to fill an important 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 are ready to work with a staffing agency to find great temporary employees, get in touch with Nelson!