Contractors or Employees. It Depends! with Quyen Clifton
[00:00:00] Chris: In this episode of Great Practices, I'm talking with Quinn Clifton, a consummate HR professional with nearly three decades of human resources experience. as well as being one of the owners of Bravo, an HR consulting firm. Quinn is going to be discussing the difference between a contractor and an employee, the pros and cons of each, and a couple of rules of thumb you can use to determine how much to pay or even when to use a contractor in your [00:00:30] PMO or on your projects.
[00:00:32] Chris: Plus, find out why independence is no joke when it comes to independent contractors and some common HR traps you can avoid.
[00:00:42] Chris: [00:01:00] Well, we'd like to welcome you to this episode of Great Practices, and today we are talking about cooking. Now, personally, I like to follow a recipe when I cook. I like to know exactly how much of each ingredient should be added, what the ratio between all the ingredients should be, something needs to be in [00:01:30] the oven.
[00:01:31] Chris: In other words, I like it. that someone else has figured out what it takes to make this meal taste great. We're not really talking about cooking today, but what we are talking about is the ingredients necessary to successfully run your PMO. And the biggest ingredient in any PMO or project is people.
[00:01:52] Chris: People, also known as human resources, comes in two main forms, either a full time employee or [00:02:00] a contractor. But what's the difference between the two? When should you use one over the other? What mistakes can be made? And are there any rules of thumb to follow when it comes to working with these two different groups? that's what we're going to be discussing with our guest today, Quinn Clifton. Quinn is a trusted and respected consultant to senior leadership on all people matters, an excellent relationship builder and passionate about talent development.
[00:02:29] Chris: [00:02:30] Plus, Quinn is also one of the owners of Bravo, a firm that works to get HR functions operational and internal processes up to date while remaining fully compliant. This includes coming up with the perfect recipe for working with employees and contractors. So Quinn, welcome to Great Practices.
[00:02:50] Quyen: Well, hello, Chris. So good to see you.
[00:02:53] Chris: we're thrilled that you're on today and we're looking forward to this discussion. Uh, let's just start off a little bit about, [00:03:00] tell us a little bit about yourself and what it is that you do and what Bravo does.
[00:03:04] Quyen: Okay. All right. Well, um, I started my professional career in retail management. Um, and I did this for about 10 years, kind of fell into HR by accident and have spent the last 28 years in this profession. So about a year ago, I retired from my position as the VP of HR for the U. S. Automotive Group. [00:03:30] It's a subsidiary of Genuine Parts Company.
[00:03:34] Quyen: I took a, I took about a month off, got connected with a couple of former colleagues and open up an HR consulting firm, Bravo. And we are, um, we specifically help small businesses setting up their HR foundation. Um, so we can do projects, we can do a subscription type, um, monthly subscription type of work.
[00:03:57] Quyen: So, I also spend a lot of time [00:04:00] volunteering as a board member for the Mile High Red Cross here in Denver, Colorado. Then about four months ago, I received a call about an HR role or HR gig with the Colorado Coalition for the Homeless. Specifically, they were looking for individuals with labor experience.
[00:04:20] Quyen: I did a little bit of research on the organization and just absolutely love the mission. So I decided to join and help them out. So, the team and I are [00:04:30] currently responsible for Total Rewards, Labor and Employee Relations.
[00:04:34] Chris: That is a full plate that you have. That is a lot going on. And what do you mean? You said you accidentally came into this profession. How did, how did that work out? Like what was, how do you accidentally become an HR leader?
[00:04:46] Quyen: Right, well, back in the day, um, in retail management, we really didn't have HR departments. And so, as a, a store manager, , of a retail business, so I, I [00:05:00] used to work for companies called The Limited, Inc., which is no longer around. And then I worked for Warner Brothers Studio Stores. And so, we had to do our own recruiting.
[00:05:10] Quyen: We had to do our own, , developing of people. And so I kind of built a name that I didn't need any help. I've always had people to fill management positions, um, because of, , my recruiting efforts and my, , development. So that's how I kind of fell into it and then got, got a little bit [00:05:30] tired of retail, because the hours.
[00:05:33] Quyen: And so, , went into work for staffing talent, agencies, and then kind of grew up in HR from there.
[00:05:41] Chris: you saw a need and you filled it and just, just kind of went from there and just seems like it's a natural thing for you to do. So, uh, it's a great place to be. So let's, let's get into our topic for today, Quinn. And let's talk about, you know, this, um, This relationship and the differences between contractors and employees [00:06:00] and how this all works out.
[00:06:01] Chris: So we're going to start with the basics. Um, how do you define a contractor and employee? How are they treated differently? How do they act differently? What does that look like in your world?
[00:06:12] Quyen: Well, In simple terms, an independent contractor usually works for himself or herself, you know, as an independent contractor, you get to set your own hours, you get to set your own pay rates, you determine your work location, and you really receive minimal supervision [00:06:30] and control of your processes.
[00:06:33] Quyen: Essentially, you're paid for the outcome of your work, um, outcome of your project or assignment that you, um, that you were given or that you accepted. And essentially, contractors decide where, when, and how they complete their projects without the client supervision. Um, the other thing that's different is that oftentimes contractors provide their services to more than one business.
[00:06:59] Quyen: And [00:07:00] They don't receive company benefits, you know, they have to provide their own tools and cover all of their own business expenses, and they're responsible for paying their own income taxes. Conversely, as an employee, Employee is a worker hired and managed by the company and they have to follow company regulated schedules.
[00:07:22] Quyen: Their work is supervised and controlled by the company. Um, they do receive tools and reimbursement, um, for [00:07:30] training. They receive benefits like PTO, health benefits, retirement contribution, bonuses, and other perks, and income taxes are withheld from their paycheck. And the work that they do is an integral part of the employer's business.
[00:07:46] Chris: Got it. So that is interesting. And so it sounds like obviously these contractors, they are very Independent thus the name independent contractor. So that really just emphasizes that And you know, you're just basically [00:08:00] saying hey, this is the end result. This is the end product You don't know how we did it.
[00:08:04] Chris: You don't know when we did it You don't know any of the background of it, but this is what you ordered and here's Here's basically your sandwich, right? It's all done and, and you don't know what we did to put it all together, but, but it fills, fills exactly what you're looking for.
[00:08:18] Quyen: And you control the work. Um, typically, you know, you're, you're specialized in some sort of area in your profession and you have a very specialized skill set that companies are looking for. And [00:08:30] so, absolutely, Chris, you're, you're paying for the end result, , the outcome of the, project.
[00:08:36] Chris: So from the company's perspective then, or, you know, from a PMO resource management perspective, what, what is the benefit of hiring contractors and what's the downside? Like, how would you look at both sides of that coin?
[00:08:51] Quyen: I think for companies, the, you know, It's, it's the greater flexibility, right? So if their business demands, [00:09:00] increased for, for whatever reason it's because of growth or, , they're trying to scale their business. So I think it gives companies more flexibility and it's quicker because you're looking for a very specific skill sets
[00:09:14] Quyen: and the company doesn't really have to commit to the, the contractor for on a long term basis. It's essentially what. What did you all agree on, , in terms of duration? and then it's while the [00:09:30] contractors typically demand a higher rate, um, a higher pay rate, it does save the company money because the, the company's only paying for the work that contractors do without additional costs that they have to bear like payroll taxes or benefits.
[00:09:46] Chris: And I think also, isn't the assumption that they will come up to speed quickly because they are, they are experts, right? So they know their field. And, and it's like, you want somebody that's going to be just churning out results [00:10:00] immediately.
[00:10:00] Quyen: yes, there, there's very, um, minimal training requirements for contractors because like you just said, Chris, , when companies are looking for contractors, they're looking for a very special skill set. And so the ramp up time is minimal, is minimal, and the company doesn't really have to provide the contractor training on that specific profession or the specific skill set.
[00:10:24] Chris: They just simply have to share the company systems and things like that.
[00:10:28] Chris: Yep. Just come in and fix my [00:10:30] problem. And they're ready to go from there.
[00:10:31] Quyen: Also they can use contractors to fill in a gap, right? When there's like a need, , to fill in for a leave of absence, um, you know, you have a, a, an employee out, a key player out, um, with a very specific skill set.
[00:10:45] Quyen: Companies may, may say, Hey, you know what? I need this. I, I can't go without this person.
[00:10:51] Chris: . , Great upsides. What's the downside of hiring contractors then?
[00:10:57] Quyen: Well, um, you can't tell the [00:11:00] contractors when, where, um, to report to work, right? So you can't, you can't do that. there's a little bit less control over the, the work of how the contractors get to the end result. You can't say, well, I expect you to do it this way. I expect you to get approval here.
[00:11:19] Quyen: I expect you, to go through this process. You can't control their work. And so that's, that's the downside of it. And I think, um, in some instances, , [00:11:30] employers feel that maybe contractors don't have as high of a level of commitment to the company because they're working for the project. They're working for the project.
[00:11:41] Quyen: And then once the contractors leave, they may lose that specialized skill set. There's there's that loss of talent. There's that loss of knowledge.
[00:11:52] Chris: Yeah, that's a good point. And I want to go back to like what you were talking about, about they're tied into the project and not necessarily the company because [00:12:00] they're not going to be tied into the culture per se, right? You know, as much as, as an employee would be. So they're just, they're a hired gun, right?
[00:12:07] Chris: They're there to do this thing, you know, uh, get it done and then move on to their next, to the next client. Like you were talking about.
[00:12:14] Quyen: Yeah. And, and one of the other things from a, from a potential legal liability perspective is that, um, as an employee, the company is required for unemployment insurance and like workers comp insurance if the employee is injured. So unless the [00:12:30] contractor buys their own unemployment insurance for the downside for the company is that if the contract is hurt while they're working for the company, they can sue the company for damages if they can prove right that the employer is negligent.
[00:12:50] Quyen: So, so that could be a downside for the, um, for the company.
[00:12:55] Chris: Yeah, for sure. Um, so again, it's just, I would assume this is all spelled out [00:13:00] in the agreements and there's going to be certain requirements that need to be met in order to be a contractor to have these certain, you know, these certain things in place there. So let's, let's change gears now. Let's talk about employees.
[00:13:10] Chris: Let's go on, let's go on the other side of this coin. So what are the benefits of hiring employees and what's the downside there?
[00:13:17] Quyen: companies can control and direct the employees work, um, during work time. Companies can train the employee the one, the way that companies want the job done. And one [00:13:30] of the biggest things that can require that the person only work for one company, for that company. In house employees, in general, have a greater sense of loyalty to the business compared to contractors because, you know, they have benefits.
[00:13:45] Quyen: They, when they have these benefits and these incentives, they're more likely to stick around. And so this will certainly provide business continuity, , and support the company as the business grows. And then one of the, [00:14:00] another upside is that employees are brand ambassadors for your business. while the contractors promote themselves, right?
[00:14:08] Quyen: Because contractors have to build a book of business. , so they promote themselves versus the company that they work for.
[00:14:15] Chris: So what, what are some of the downsides when it comes to hiring
[00:14:18] Chris: employees?
[00:14:19] Quyen: yeah, the downside with employees is, is that, um, employees come with a boatload of employment laws and regulations. So, so while the employee's salaries are [00:14:30] typically lower than the hourly pay of an independent contractor, do cost the company a little bit more because of payroll taxes.
[00:14:40] Quyen: Companies have to provide mandatory benefits like health insurance, pay sick time, paid leave time, unemployment insurance, and workers comp insurance, etc. So there's certainly more cost, um, to the company to hire employees.
[00:14:57] Chris: And again, if you flip back to what you're [00:15:00] talking about, the benefit of a contract being flexibility, With an employee, there's inflexibility or a little bit of inflexibility there, right? Because it's like, if business gets slow or, you know, then you're kind of like, oh, what do we do with these, with these payrolls
[00:15:12] Quyen: then you have to look at the, the laws and based on the business need and just to make sure that you're in compliance. Like you said, whether they have to flex, , when business is slow, whether they have to reduce workforce or lay off. so that process, you know, is, is [00:15:30] defined.
[00:15:30] Quyen: And so it's, it's less flexibility for sure.
[00:15:33] Chris: Yeah, no doubt. Now, what guidance would you provide if someone should hire a contractor over an employee or if an employee would be better in a situation rather than the contractor? Is there any guidance you would provide in that area?
[00:15:48] Quyen: Yeah, yeah, well, I would certainly need to understand the needs of the business right and so there's been a lot of talk around misclassification [00:16:00] Of a contractor and they should have been an employee. So, so we would need to take a look at the scope of the work, um, the duration of the assignment, the type of the project, , you know, is it ongoing?
[00:16:13] Quyen: Is this type of work needed ongoing? Or is it really only for a specific, time period? and is the work an integral part of the business, , or is the work just needed to fill a gap?
[00:16:27] Chris: So if it's, if it's integral, then that really, [00:16:30] that does lend itself to more being on the employee side of things. Right. And I guess, and also like you were talking about earlier, a contractor, they're going to walk away with all that knowledge, you know?
[00:16:40] Chris: So, so if it is integral, you, you want to keep that knowledge there.
[00:16:45] Chris: So it's really kind of a good, good parameter to, uh, to look
[00:16:48] Quyen: Yeah, I mean, contractors have very specialized skill sets and as we talked earlier, they don't require a lot of ramp up time. And so you can just come in, hit the ground running, and help the [00:17:00] projects and, and help speed up. whatever it is that the company needs. And so, so typically, that's what I would advise is like, hey, let's look at the project.
[00:17:09] Quyen: Let's look at, is this a skill set you just need to help transform the business, to help set up the business, to help scale the business? Or is this really what you need as part of the business?
[00:17:20] Chris: Yeah. That's good. That's a good parameter to start with and then kind of, kind of go from there.
[00:17:25] Quyen: And, and the, the IRS, , and also the Fair Labor Standards [00:17:30] Act also provide guidelines of, how companies can determine whether an employee or worker is an employee or a contractor. So, so they have questions that, you know, that I would typically follow and, and ask the company.
[00:17:45] Quyen: All these questions to make sure, like, hey, really what you're talking about is an employee rather than a contractor.
[00:17:52] Chris: Which brings us to our next question, because I think you mentioned, you mentioned it earlier, you talked about this misclassification, right? , so that [00:18:00] was definitely one mistake. And maybe you talk a little bit further about what that is. And then what other mistakes have you seen people make when it comes to bringing contractors on board or employees and that type of thing?
[00:18:11] Chris: So let's start with that misclassification.
[00:18:13] Quyen: , so I think the biggest thing is that, , when you hire a contractor and you treat them like an employee, and I'll give you some example, you provide them with, , laptops, you provide them with tools and equipments. So in general, the contractor have to provide all that. So you, you [00:18:30] know, you provide them the tools, you reimburse their work expenses.
[00:18:34] Quyen: So, you know, The reason why the contractor rates, either it be a project rate or an alley rate, is higher is because as a contractor we would absorb all that cost, and then we would, you know, kind of incorporate it in the bill rate, , or the project rate, and then dictating when and where they work, dictating how they should get the project done.
[00:18:56] Quyen: And so, , In general, if you treat a [00:19:00] contractor like an employee, more than likely you misclassify them.
[00:19:03] Chris: got it. Okay. So, that really comes to Not providing them with equipment, not providing them with, you know, office or the laptops and that type of thing. Not telling them when and where and how, just let them do the thing. And again, you are just really looking at the end result, uh, is what it sounds like with this.
[00:19:21] Chris: Got
[00:19:22] Quyen: And so the contractor can work. You know what? Some contractors are great. They can come in and get it done. They can get the job done in three, four, five hours a [00:19:30] day. Sometimes they may take, you know, they have a lot greater flexibility in dictating their time. And so. So we can't as a, as an employer, the employer should not say, well, if you're taking a day off, you need to ask me about it.
[00:19:45] Quyen: I need to approve it. Right? So you, you can't, you, they have true autonomy, true autonomy, and they dictate how the work gets done.
[00:19:55] Chris: Again, back to independent, right? That word is, that word is there for a reason, [00:20:00] independent contractor. What other, what other mistakes have you seen, , people make, Quinn, when it comes to, you know, , contractors and employees and how that works?
[00:20:09] Quyen: most companies when they have contractors, they want to make contractors feel welcome, like part of the, the company culture and organization.
[00:20:17] Quyen: And so they may allow the contractors to To participate in their wellness events, right? or, , invite them to outings. And so, I would be cautious against that because [00:20:30] now again, like what we said earlier,
[00:20:32] Quyen: you're treating your contractor as an employee. And usually the question is, if the contractor feels like they're an employee, the company misclassified them.
[00:20:42] Chris: Interesting. And that is, that is tough. That's a tough line to, to follow because some of these contractors, you're going to be working with them side by side for years, you know, and they're, and, and, and they're, they're part of the team. And, and so that is a fine line [00:21:00] to follow about, you know, cause it's like, if everything's all good, it's all good.
[00:21:03] Chris: But if something goes off the rails, then that's when you run into problems. So that's a fine line to walk, isn't it?
[00:21:10] Quyen: And Chris, yeah, you mentioned We work with contractors as employees and, and employers. We work with contractors and you want to make them feel like, like, hey, the welcoming, right? You, you want to make them feel welcoming. , one of the, the key thing that I just picked up that you said, sometimes you [00:21:30] work with them for years.
[00:21:31] Quyen: Sometimes companies make mistakes. It's having these contractors on for years because then it's going to be very difficult to say like, well, wait a second. It's not, it's not for a defined period. It's not for a project. You've need this contractor for like years and years and years. there could be an argument there that, that contractor may be an employee.
[00:21:53] Chris: Interesting. Even, but like, even if the contract is for like six months or a 12 [00:22:00] month contract, that would eliminate that perception. Is that, is that right? I mean, if the contract were six months or 12 months.
[00:22:07] Quyen: I certainly want to make sure that companies have their, independent contractor agreement looked at by legal. But in general, it should be for the project, right? So we know sometimes the project lasts a long time, but there has to be a defined scope within the project.
[00:22:26] Chris: Got it. Great advice. So Quinn, let [00:22:30] me ask you a couple of rule of thumb questions. You know, just, uh, got two of these here. Um, let's talk about pay equivalency. So, you know, you were talking about typically a contractor is going to make more you know, maybe on an hourly basis, but let's say an employee makes, let's say they make 100, 000 a year.
[00:22:49] Chris: That's roughly 50 an hour, roughly, right? What would the equivalent be to bring a contractor on? Is there like, oh, it's going to be 30 percent more, 40 percent more. Is [00:23:00] there an equivalent? How does that work?
[00:23:02] Quyen: you would have to do a bit of market research. I don't have like a percentage per se because typically you would go out and take a look at the annual salary of, of a position that's very similar to what you're looking for in a And then I think what you need to include in there is the, some of the tangible cost, right?
[00:23:23] Quyen: Like, what would it cost to provide this contractor benefits? Like, what is our [00:23:30] benefits for our employees? So I think you may want to add some of that on in addition to the annual salary, , because contractors have to absorb their own benefits, their own, you know, unemployment insurance. and they're covering for the expenses, they're covering for all expenses and so, so I would recommend that the, the organization that hires contractor take a look at hey, what would this.
[00:23:58] Quyen: If we were to hire this as [00:24:00] an employee, what would it cost us? And then take a look at those additional costs and then come up with an hourly rate. , you know, annual salary divided by 2080, come up with an hourly rate. , so, so that's one way to look at that. , I know some contractors are paid by the project,
[00:24:17] Quyen: right?
[00:24:18] Chris: fee type
[00:24:19] Quyen: yeah, there's a task or there's a problem that the contractor is coming in to help. And so we don't even talk in terms of hourly rate. We just talk in terms of, hey, once [00:24:30] you get this, this is how much you will get. And then when do you get like the first installment, second installment, third and so forth.
[00:24:37] Quyen: so there's not really a rule of thumb. , there are some, there's a lot of websites out there with gig type work, project type work. So I would do an additional research on that because a lot of those companies also post for these, , position and what they would pay.
[00:24:54] Quyen: So, so a bit of market research would need to be done.
[00:24:58] Chris: But I guess what I'm hearing you say, [00:25:00] ultimately, besides it depends, right? Is it's, it's probably going to be a little bit more, maybe like on that hourly basis, if you were to break it down into hours, but you know, in the grand scheme of things with all the benefits and all the PTO and all that kind of stuff for an employee, it probably, it probably averages out to be about the same, but with a little bit of that flexibility and you've got somebody that can come on quickly as far as, you know, ramping up and that type of thing.
[00:25:26] Chris: Um, Second rule of thumb question. I want to talk [00:25:30] about ratios, you know, going back to that recipe analogy. Is there a rule of thumb to follow, uh, regarding the right mix? Like, let's say you had a hundred people on board. Your company has a hundred people. Is there a good ratio of contractors to employees?
[00:25:44] Chris: Does that matter? What does that look like?
[00:25:47] Quyen: You know, I've never been asked this question before, Chris. And so, so I think this is a little bit difficult to answer. And, and hiring a contractor versus an employee depends on multiple factors that we talked about [00:26:00] earlier, is that, you know, what is the scope of the work, the duration of the work, and do you need the contract to actually just fill in gaps?
[00:26:07] Quyen: Like, because, because your current workforce don't have the skillset, right? They don't have the special skills that you need. . to, to help ramp up the business or, or going through a major change. So, so that's a little bit hard. I, I don't know if there's a, a rule of thumb. It depends on the transformations that the company's going [00:26:30] through, right?
[00:26:30] Quyen: And how quickly they need to get up to speed, on this. If the, the company's opening multiple locations and so they may have to hire , more contractors than employees because they need that special expertise
[00:26:45] Chris: So what I'm, what I'm hearing you say is again, it depends, you know, it's going to be based upon the business needs. So look at what your business need is. Ask yourself those questions, you know, the ones that you're talking about as far as autonomy and independence and bringing your own [00:27:00] thing and coming up to speed quickly.
[00:27:01] Chris: And is that what you need for your business at that moment in time? Or do you have maybe a little bit of a longer, you know, longer range, you know, runway that you can bring employees on ramp up and you want them to be around for the long term.
[00:27:12] Quyen: yeah, and sometimes I've been a contractor before in earlier in my career when, um, you know, I was working for an oil and gas company and they didn't have recruiting skill set. So I came in as a recruiter and, um, and I remember feeling like, oh, I'm not invited to these [00:27:30] To these parties, you know, that, that they were having, but I, I understood, I understood that they were trying to keep a very clear line that you are a contractor, um, but I was treated well.
[00:27:41] Quyen: And then once I was able to set up what they needed me to set up a recruiting process, um, help them with, different projects, then they offered me a position, um, a full time position at that point. So. So that's also a great opportunity for contractors as well.
[00:27:58] Chris: Yeah, get your foot in the door, you [00:28:00] know, kind of, kind of build those relationships and then you just never know where that's going to end up there. well, Quinn, this has been a great conversation. And if our audience were to remember one great practice or just one thing from our conversation today, or one piece of advice, what would you want them to know?
[00:28:15] Chris: Or what is that?
[00:28:17] Quyen: Yeah. So, um, so if, if you want autonomy. in how and when and where you work and you want to experience different cultures and learn about different companies and you [00:28:30] love changes, um, I would recommend that you do contract work. Now with that said, um, if, if you're able to have, you know, benefits, I know benefits is super important to, to everyone.
[00:28:42] Quyen: So if you're, if you're able to get benefits elsewhere and you want all that, then I think contract work is, is, a great fit for you. , and if you want stability, you know, stable work, stable benefits, um, receive company perks and want a clearly defined career path [00:29:00] and development opportunities, then absolutely get hired as an employee.
[00:29:05] Quyen: , and then my biggest advice for companies that don't cheat independent contractors like employees.
[00:29:11] Chris: Yeah, clearly, you could see all the red flags And I think there's been, there's been many lawsuits about that, right? With big companies
[00:29:18] Quyen: Well, thank you very much, Quinn. What is the best way for people to get in touch with you to learn more about Bravo or get some other employment related questions answered, Well, Chris, thank you so much, for the [00:29:30] time and, uh, for this chat. I'm on LinkedIn and would love to connect with your audience. , please also visit our site at Bravo and it's spelled a little bit different. B H R A V O. com. Um, we, we also just started our LinkedIn page there, so you can connect with us there and then my partners and I would love the opportunity to help, , support if you have any HR needs.
[00:29:54] Chris: Perfect. , and that is a very nice looking website. So [00:30:00] again, B H R A V O. com. If you, if you haven't checked it out, it's, it's clean, it's colorful, it's easy to follow. I love it. So, uh, encourage everybody to go to that. All right, Quinn. Well, thanks for being on today and we will talk to you soon.
[00:30:14] Quyen: Okay, thank you.
[00:30:15] Chris: Well, that was another great episode of Great Practices. And we certainly do appreciate Quinn joining us today. What were some of these great practices and [00:30:30] insights that came from this episode? Well, I liked Quinn's very succinct definition of a contractor versus an employee.
[00:30:39] Chris: Contractor works from themselves, sets their own hours, sets their own pay rate, uh, sets their own work location, minimal supervision and control of processes, uh, really focused on being paid for the outcome of the work. they can decide where, when, and how they can do their job without client supervision [00:31:00] versus an employee who is hired and managed by the company. They've got the company schedule, they're supervised and approved by the company. They receive tools and training and perks and bonuses, and their income taxes are paid for.
[00:31:16] Chris: All of these things roll into being an employee where a contractor Certainly operates very differently. I guess you would say independently, uh, being an independent contractor. Quinn then continued about the [00:31:30] benefits of a contractor. There's a lot of positive things about why it is that, you know, as a PMO or a project manager that's looking to staff their project, why you would consider a PMO.
[00:31:41] Chris: Contractor greater flexibility. Uh, they're quicker. They come up to speed quicker. They've got a specialized skill set that they're going to be able to plug in and accomplish exactly what needs to be done, uh, without a whole lot of training or getting them up to speed. They're perfect for. Filling in [00:32:00] gaps, you know, there may be like a temporary gap as far as a skill set goes, or it may just be need to have more bodies that are going to perform this effort or do this thing.
[00:32:10] Chris: And that's a perfect place a temporary basis for a contractor to be used. The downside of contractors, you can't tell them when and where to report to work, uh, loss of control of how they get to the end product.
[00:32:25] Chris: This was kind of interesting because it kind of plays into the culture of a company is that they may not have [00:32:30] as high of a level of commitment to the company as an employee does. And that's reasonable because they ultimately are working for themselves, uh, where, you know, an employee is an ambassador of the company and they'll speak well and really endorse the company because that's ultimately their company Another downside that she brought up, there's the fact that you can lose That's special talent, that skill and experience that even they acquire while they're on the job and they're working through that project. , you could [00:33:00] lose that then when that contract is up and then they move on to a different client or different customer.
[00:33:05] Chris: And, uh, this certainly could be a big impact to the project team going forward.
[00:33:09] Chris: Then the other side of things was really what are some of the benefits that being an employee or having employees as part of the team bring to the table? Well, this is where you can control the work. You can train them the way that you want the job done. Uh, they're working only for one company, like a contractor may have multiple companies, most likely will have multiple [00:33:30] companies that they're doing work for.
[00:33:31] Chris: , but this employee will be working for one company, have that greater sense of loyalty, you know, receiving those benefits and those incentives, which really, you know, breeds that business continuity, because the goal is, the objective is, is really to have an employee around for a long period of time.
[00:33:49] Chris: The downside of having employees on the project team as I think she said, there is a boatload, a boatload of laws and [00:34:00] regulations that. Uh, a company employees and overall, they may be more expensive once you figure in taxes, insurances, PTOs, benefits, bonuses, perks, all of these other things that come with an employee, there's a lot of extra overhead that is kind of baked into the contractor's rate or their fee, but the company is going to have to pay that straight up for, Uh, an employee
[00:34:29] Chris: I like the point that [00:34:30] Quinn made about the misclassification of a contractor being a mistake that many companies have made. This is where you treat a contractor as an employee. So this means that you find yourself setting their Their work hours, or you find yourself setting the way that they do their work.
[00:34:49] Chris: Maybe you provide them with laptops or tools and equipment, and then you instruct them to do the work in a certain way. If you find that we are doing this, That definitely runs the [00:35:00] risk of them being treated as an employee and there could be some legal and financial implications because of doing so. So that was something that I thought was really good as far as a reminder of how to stay away from those troubles.
[00:35:13] Chris: And this included even, you know, participating in, , employee activities. You know, it's like it's a fine line between the. Contractor wanting to be part of the team and being part of the team and then including them , in employee [00:35:30] outings, employee wellness events, employee parties and this type of thing where you're really kind of treating them the same as everybody else.
[00:35:39] Chris: The reality is, is that it's a different entity. It's a different type of working relationship. And as a company, you need to respect that.
[00:35:47] Chris: And I like the way she kind of wrapped it all up with giving advice from two different perspectives. One, from a worker's perspective, saying if you like that autonomy and [00:36:00] when, where, and how you work, you like experiencing different cultures and you love change, then being a contractor is the way to go.
[00:36:09] Chris: Or are you looking for stability, a career path, development opportunities, perks, benefits, all of those things that are associated with being an employee? Then working for one company and becoming an employee of that company is the way to go. And then she wrapped it all up with basically saying, if you are a company that [00:36:30] is using contractors, don't treat independent contractors like an employee.
[00:36:35] Chris: That's just nothing but trouble.
[00:36:36] Chris: what we'd like to thank Quinn for being on great practices today. And do you have a great practice you'd like to share? Go to the PMO leader. com click on resources, great practices, podcast, and fill out the form at the bottom of the screen.
[00:36:51] Chris: Someone will get in touch with you shortly. Be sure not to miss a single episode by subscribing to Great Practices on your favorite [00:37:00] podcast platform. And if you like what you've heard, we've had some great guests on. We've got more coming in the future. Be sure to share this with your manager, your colleague, and any others that you think would benefit.
[00:37:11] Chris: So thanks again for listening to this episode and keep putting Great Practices into practice.
