Contingent worker definition and meaning
A contingent worker completes short-term assignments or provides specialized services to a company on an as-needed basis without being hired as an employee.
What you’ll learn
What you’ll learn
Updated: September 5, 2025
More about contingent employees
In many industries, hiring contingent workers is becoming more commonplace because of the flexibility it provides both workers and employers. When employers have projects that don’t require a full-time employee, they may look outside of their organization for talent to fulfill these assignments on a project-by-project basis. A contingent worker may take on tasks ranging from day labor or seasonal work, to content development and website design, to brand consulting, or even market or product research and development.
Types of contingent workers
There are four key types of contingent workers your business may consider:
Freelancers: A freelancer is a type of independent contractor who earns money based on completing a job or project. Graphic designing, writing, software programming, website design, and data entry are all common examples of freelance careers.
Independent contractors: An independent contractor is a broad category of self-employed workers. Independent contractors can own their own business or contract with businesses to provide a particular service.
Temporary employees: A temporary employee or temp is paid by a temp agency that manages employment contracts. They are typically hired for a specific period of time.
Consultants: A consultant is an expert in a particular area or field. Consultants offer specialized advice and expertise to organizations, typically on a contract or project basis.
Your business may hire one or all four types of contingent workers, depending on your current needs.
What are some pros to hiring contingent workers?
Though there are many advantages to hiring contingent workers, here are a few that employers find most appealing:
Flexibility: Since contingent workers are hired to fill a need for a short time, or for a specific project, businesses can avoid the commitments that come with hiring, onboarding, and training full-time employees. Companies can also quickly scale their workforce (up or down) as needed by dipping into a pool of talented people who are, themselves, looking for project-work without committing to any single employer.
Specialized skills: Contingent workers are typically hired because they bring a set of specialized skills and experience to a project that is simply not available in-house. If the skills needed are rare, or the need for these skills aren’t on-going, then sourcing a contingent worker may be the best bet for high-returns at low-cost. Moreover, while they’re working alongside a company’s regular employees, a contingent worker will often fill knowledge gaps and share processes that can help up-skill existing employees, which can bring new opportunities to employees for personal development or even career advancement, and may even prevent the work from having to be outsourced in the future.
Cost-savings: Strategically delegating tasks to contingent workers can also have a positive impact on a company’s bottom line. Freelancers are generally accustomed to advertising their services through agencies like Fiverr or SolidGigs, making it easier – and cheaper – to find the right talent for any task without the expense of sourcing and interviewing candidates who apply for a full position posted on a job board.
The cost-savings don’t end there. Because they’re contracted to bring their own skills, tools, and talents into a specific project, contingent workers save employers the time and money needed to onboard and train a new employee, not to mention the costs of acquiring any tools or resources needed to complete the task. In a competitive job market, hiring an employee generally means offering perks like health insurance, retirement plans, or paid time off, which contingent workers won’t be expecting.
Employers of contingent workers also save big by avoiding the typical payroll tax contributions inherent with hiring a W-4 employee, like FICA, unemployment insurance, and workers’ compensation.
Challenges in managing a contingent workforce
While there are significant benefits to hiring contingent workers, there are also some challenges to consider when managing a contingent workforce:
Legal and compliance issues: You will still need to be able to navigate and enforce labor laws with non-permanent employees, which can be more challenging when they are spread across locations. You will likely use IRS Form 1099-NEC (nonemployee contractors) for your contingent workforce, which is different than hiring a W-4 employee. Make sure you consult with a legal expert before building a contingent workforce.
Security risks: When temporary employees have access to sensitive company or customer information, this can present a real security risk. You can mitigate these risks by putting privacy controls in place.
Team cohesion and communication: If you have employees coming and going who are not fully familiar with your company culture and day-to-day business operations, you may have some challenges when it comes to team cohesion and regular communication. You can make these a priority through training and regular meetings.
When you establish clear and enforceable contracts and policies and seek guidance from legal and HR professionals, you can mitigate all of these risks and support smooth operations with your contingent workforce.
Effective management practices
The following effective management practices will support positive relationships with your contingent workers:
Onboarding and integration strategies: Every employee deserves a thorough and organized onboarding experience. Make sure contingent workers are not an afterthought when it comes to training and integration into your company.
Communication best practices: Your business will succeed when it establishes clear communication with independent contractors, including regular check-ins to solicit feedback and regular updates so they have the information they need. Fortunately, technology makes it easier than ever to communicate and collaborate with non-traditional employees.
Performance evaluation: Just like every other employee, contingent workers should receive regular performance reviews and evaluations. This can provide areas of potential growth and celebration.
Building relationships with contingent workers: Rather than treat contingent workers as something outside of your company, focus on building meaningful relationships. Invite them to your company events, when appropriate, and find ways to connect them with other employees and groups so that they feel like they are a part of your company.
When contingent workers feel connected to your organization and other team members, their contributions will show it.
Taxes and contingent workers
Because contingent workers are freelance consultants, they’re generally classified as independent contractors, meaning they have their own tax responsibilities. This relieves employers of payroll tax obligations, such as requirements to withhold and deposit taxes, or to match Social Security and Medicare contributions. That said, employers are not completely off the hook come tax-time, and will need to furnish an IRS Form 1099-NEC (nonemployee compensation) to any contingent worker who is paid $600 or more by the end of the year. This threshold will increase to $2,000 in 2026.
Using contingent worker in a sentence
“With the rebrand being such a large undertaking, I’m grateful that our marketing director gave us the green light to hire a graphic designer as a contingent worker for the first quarter of the year.”
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