What is a contingent worker?

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.

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.

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.

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 (non-employee contractor)  to any contingent worker who is paid $600 or more by the end of the year.

Terms related to: Contingent worker

• Boomerang employee
• Employee
• Independent Contractor
• W-4 Tax Form
• Skills gap
• Talent shortage

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