ComplyRightComplyRightComplyRightComplyRight
  • WEBINARS
    • Upcoming
    • On Demand
  • TOPICS
    • I want to learn about:
      • Hiring an Employee
      • Creating Policies
      • Paying Employees
      • Discrimination & Harassment
    • Column 2
      • Employment Law
      • Labor Law Postings
      • Employee Leave
      • Employee Recordkeeping
    • Category 3
      • Independent Contractors
      • Tax Reporting
      • Improving Employee Performance
      • Firing an Employee
    • Seven Reasons Why Employee Performance Reviews Still Matter in a Remote Work World

      Employee Performance Reviews
      Read More
  • SOLUTIONS
    • Employee Management
      • Hiring
      • Time and Attendance
      • Training and Safety
      • Recordkeeping
      • Employee Policies
    • Labor Law Posters
      • Poster Guard® Service
      • ComplyRight Posters
      • Electronic Posters
      • Employee Handouts
      • Partner Solutions
    • Tax Information Reporting
      • DIY Filing Solutions
      • Processing Services
      • Partner Solutions
    • NEW! Secure Document Print and Mail Services
    • Featured Solution

      Poster Guard Compliance Protection
      Learn More
  • ABOUT
    • Who is ComplyRight
      • Mission
      • Core Values
      • Leaders
      • Contact
    • Careers
      • Culture
      • Benefits and Perks
    • Brands
      • HRdirect
      • HRdirect Smart Apps
      • Poster Guard
      • eFile4Biz
    • Join Our Team

      Join Our Team
      Learn More
  • SUBSCRIBE

Getting Up to Speed with the Gig Economy: What You Need to Know About Working with Independent Contractors

Published on March 14, 2019
  • Independent Contractors
  • Worker Classification

It’s called “gig” or on-demand work — short-term work arrangements based on specific, temporary projects. And it’s a growing trend in the work world today. In fact, a January 2019 ComplyRight Trend Survey revealed that 37 percent of the 427 small business employers surveyed use gig workers (also called freelancers or independent contractors). That’s more than 1/3 of their workforce, a number in line with national statistics.

Are your business needs changing in the direction of more freelance work? If so, when does it make the most sense to work with independent contractors — and what are the requirements for a proper, legal relationship? Let’s look at the key factors impacting your workplace as the gig economy heats up.

What’s Stimulating the Growing Gig Economy

Working with independent contractors offers distinct advantages for your small business. It’s often more affordable because you don’t have to pay taxes, social security or benefits. Further, you have the flexibility to obtain the exact services you need, when you need them.

For example, let’s say you need to build a website or promote your business to a new set of prospects. In clearly defined instances like these, it makes more sense to contract with a web developer, marketing consultant or other professional freelancer on a temporary, per-project basis.

When it’s time to contract out certain jobs, you’ll find that many professionals today are more interested in gig work than traditional, full-time employment. In general, gig workers are motivated by flexible hours, the ability to create their own schedules and the potential to earn more than they could in a typical salaried or hourly position. Technology certainly plays a starring role in this changing dynamic, as well. Rather than being restricted to a standard office setting, more workers can perform their jobs from home or remotely with the use of laptops, internet access, file-sharing platforms and online apps.

As the gig economy grows, you may find contractors more readily available and appropriate for certain business needs than traditional employees.

Keeping the Relationship Legal

Before you turn to freelancers, consultants and other independent contractors to support your business operations, you must recognize the differences in the working relationship. The IRS and Department of Labor (DOL) expect these workers to meet certain criteria that distinguish them from employees. Get it wrong and you run the risk of misclassification, which carries legal and financial consequences.

Workers are likely independent contractors if they:

  • Use their own equipment (laptop, phone, tools) to perform the job
  • Work on a temporary basis and are paid “per project”
  • Service other clients, often at the same time (look for an individual business license)
  • Work at an offsite location (occasional meetings at your business location are OK; working onsite for days and months at a time are not)
  • Have the freedom to set their own hours and schedule

Remember: The worker is not an employee. You must avoid micromanaging the person’s day-to-day activities — and only focus on their final results — to uphold the proper legal arrangement.

Additional Guidance for Handling Gig Workers

Get expert direction on working with independent contractors, particularly the various legalities that apply. For example, to meet your legal and tax responsibilities, be certain workers complete a W-9 form before beginning any project. You’ll need this form to issue a 1099 and report taxes by January 31 the following year.

Be aware, too, of the importance of an independent contractor agreement. Having an individual sign an agreement helps ensure everyone is clear on the terms and conditions of the relationship.

Related Content

  • Hiring contractors vs employees
    Independent Contractor vs. Employee: Weigh the Pros and Cons to Make the Best Choice
    December 7, 2020

    Independent Contractor vs. Employee: Weigh the Pros and Cons to Make the Best Choice In spite of all the challenges … Read more

    Independent Contractors

    Worker Classification

  • Contractor or Employee? Exempt or Non-Exempt? Understanding the Distinctions When Classifying Workersplay-button
    Contractor or Employee? Exempt or Non-Exempt? Understanding the Distinctions When Classifying Workers
    September 2019

    A handful of high-profile cases — and increased attention by the IRS and Department of Labor — has put worker … Read more

    Independent Contractors

    Worker Classification

  • Independent Contractor or Employee? Understanding the Risk of Misclassification and How to Avoid Itplay-button
    Independent Contractor or Employee? Understanding the Risk of Misclassification and How to Avoid It
    November 2018

    Many businesses choose to work with independent contractors, which is perfectly acceptable. But only if you follow the legal parameters. … Read more

    Independent Contractors

    Worker Classification

  • Working with Independent Contractors: Smart Strategies for Effective (and Legal) Outsourcingplay-button
    Working with Independent Contractors: Smart Strategies for Effective (and Legal) Outsourcing
    November 2017

    Do you sometimes turn to freelancers, consultants and other independent contractors to get the work done? With the IRS and … Read more

    Independent Contractors

    Worker Classification

  • 1099, W-2 and ACA Forms: Important IRS Updates That Could Impact Your Tax Filing (and Your Business)
    1099, W-2 and ACA Forms: Important IRS Updates That Could Impact Your Tax Filing (and Your Business)
    September 23, 2016

    Want more details on these IRS updates and ideas on how to make the tax return filing process even easier? … Read more

    Independent Contractors

    ACA

  • 5 Smart Tips for Managing Your Independent Contractors
    5 Smart Tips for Managing Your Independent Contractors
    June 10, 2016

    Blurring the lines between independent contractor and employee could cost your business. These best practices will help keep the distinction … Read more

    Independent Contractors

    Worker Classification

  • Managing Your Company Risk of Worker Misclassification
    August 31, 2015

    Do you know the difference between employees and independent contractors? Wrongly classifying workers has far-reaching implications, impacting the economy, quality … Read more

    Independent Contractors

    Worker Classification

Upcoming Webinar

Webinar Name

Date & Time

Presented by:

Learn More
Shop Our Brands 
HRdirect
HRdirect Smart Apps
Poster Guard
Formstax eFile4Biz

At ComplyRight, our mission is to free employers from the burden of tracking and complying with the complex web of federal, state and local employment laws, so they can stay focused on managing and growing their businesses.

©2021 ComplyRight, Inc.

Webinars

  • Upcoming
  • On Demand

Solutions

  • Employee Management
  • Labor Law Posters
  • Tax Information Reporting

About

  • Who is ComplyRight
  • Careers
  • Brands

Legal

  • Privacy Policy
  • Terms of Use

Popular Topics

Performance Policies Discrimination and Harassment Employment Law HiringLabor Law PostingsIndependent Contractors

Subscribe to Our Newsletter

Subscribe

Follow Us

  • RESOURCES
    • Knowledge Center
      • Tip Sheets
      • E-Guides
      • Podcasts
      • Infographics
      • Videos
    • Webinars
      • Upcoming
      • On Demand Webinars
    • Research and Trends
      • Compliance Survey
      • Trend Surveys
      • Minimum Wage Monitor
    • HR 101 Courses
  • TOPICS
    • Hiring an Employee
    • Creating Policies
    • Paying Employees
    • Discrimination & Harassment
    • Employment Law
    • Labor Law Postings
    • Employee Leave
    • Employee Recordkeeping
    • Independent Contractors
    • Tax Reporting
    • Improving Employee Performance
    • Firing an Employee
  • SOLUTIONS
    • Employee Management
      • Hiring
      • Time and Attendance
      • Training and Safety
      • Recordkeeping
      • Employee Policies
    • Labor Law Posters
      • ComplyRight Posters
      • Poster Guard®
      • Partner Solutions
    • Tax Information Reporting
      • DIY Filling Solutions
      • Processing Services
      • Partner Solutions
  • ABOUT
    • Who is ComplyRight
    • Newsroom
    • Careers
    • Brands
    • Contact Us
  • SUBSCRIBE
ComplyRight