Independent contractors, consultants, freelancers, contract workers, 1099 “employees,” and outsourced staff. All of these are titles used to refer to individuals who work for you but are paid outside of payroll. For small business owners and entrepreneurs, I always recommend hiring contractors (the generic name I will use for all the above) vs. employees whenever possible.
Why I recommend hiring contractors when possible:
- As an early-stage employer, you often don’t know the exact skills you need.
- You often can get better skills for your money with a contractor.
- You don’t have the same commitment to a contractor that you have to an employee.
Of course, you can’t just make anyone a contractor. How you classify and pay the people working for you is not totally your decision. The IRS has guidelines regarding who must be an employee vs. who can be an independent contractor, the Department of Labor (DOL) also has rules, and some states have even stricter rules. Misclassification of employees can result in fines, penalties, and major headaches. If you are unsure of whether an individual should be an employee or an independent contractor you can check with your tax consultant, attorney, or ensure you are in compliance by signing up for a free 30-minute assessment.
<<CHECK OUT OUR VIDEO ON HIRING INDEPENDENT CONTRACTORS>>
Even if, by law, you cannot directly hire a person as an independent contractor, you could make a hire through an employment or temporary agency. This could help you avoid some of the struggles most new business owners have when it comes to directly hiring employees.
For some businesses, independent contractors or freelancers are their primary workforce. This is often true for agencies that hire freelancers or subcontractors to step in to do specialized work. Do you have any of the following individuals working for you who are not paid on standard payroll:
A talent pool of independent consultants who are subcontracted through your company to do work for your clients under your company name and on your behalf?
Staff you use on a consistent basis that come from a secondary firm (staffing agency or specialty company)?
Small pool of freelancers you use as needed?
Outsourced services that are an integral part of your operation?
If you use contractors as your primary workforce the secret weapon only a few companies know is, having a handbook specifically developed for these independent members of your team yields big results. Click Here to Get a Free 30-minute HR assessment and determine if you are better hiring employees or contractors.
Creating a handbook specifically for your contractors. Never give contractors a copy of your employee handbook and do not attempt to combine information for employees and contractors into the same handbook. Doing that will confuse your employees, the contractors, and eventually it will even confuse you. It might also indicate that you are treating your contractor as an employee. You want to make the independent contractor role clear to everyone (you, your employees, and your contractors).
Having a handbook for your independent or outsourced help isn’t just a good idea, it will make you stand out.
Contractors who work for you consistently or intermittently and play an important role in your organization need the guidance a handbook can provide. The handbook helps them understand your company culture and provides key information they need to know. It also clearly differentiates their role from the role of an employee.
Having a contractor handbook will set you apart from
their other clients.
So, what goes into a contractor handbook?
Here is a list of things you will want to include in your contractor handbook:
- A welcome letter from the CEO.
- Your mission, vision, values, and guiding principles.
- Details about your company culture and practices
- Answers to frequently asked questions
- Company specific information like where to park, how and when they can gain access to the building, and when certain events usually occur
- Any rules or regulations (policies) that also apply to the contractors. Many of your policies will not.
- Anti-discrimination and anti-sexual harassment policy
- Whistleblower procedures
- Complaint procedures
- Health and safety information (if applicable)
- A reminder that independent contractors exercise independent control in how they approach and complete a project and that they are responsible for obtaining and using their own tools and equipment to complete their tasks.
Do not add anything that would imply that they are employees, such as calling in when sick, work hours, a time to arrive at work, etc. You can put standard operating hours, but there cannot be any indication they are to abide by those hours. Any arrangements of work hours should be arranged individually and should be flexible.
You may also want to have separate operating manuals or standard operating procedures for your contractors or consultants who do work that integrates with your operation. If you choose to do this—and I encourage you to—you will want to create different operating manuals for various responsibilities, such as: answering the phone, social media, consulting as a subcontractor, marketing, web development, or recruiting. In your free 30-minute assessment we can help you determine the best manuals for your business.
Keep your handbooks and manuals online and easily accessible, not printed. By putting them online, it allows you to keep the information up-to-date and ensure everyone has access to the same version. When you have printed manuals, you quickly end up with different versions floating around.
Having a single place where employees and contractors can easily access the information they need is a best practice.
It also lets the people that work for you know that you are organized and care that they have the information they need to do their best work. Providing well written documents that are readily available to your independent contractors and employees will greatly assist in creating a highly productive, committed, and conscientious team.
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