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More than 10 percent of the workforce in the U.S. is made up of independently contracted workers. It’s predicted this statistics will only increase in the next 10 years, with contracted and freelance workers growing to possibly half of America’s workforce. Before this statistic increases, it’s vital to your business understands the difference between a contract worker and a full-time employee.

When making the decision to hire a contractor or a full-time employee, there are many factors to consider. An important factor for a significant number of employers is cost efficiency. For others, the most concerning component depends on the length of time the employee is needed. Before making this decision, consider the following factors.


For those employers interested in a candidate that will be a member of your team for the long haul, a full-time employee is the most obvious choice. Hiring this type of employee is like making a long-term investment. You will spend a considerate amount of time training the candidate and acclimating them to your team. With this long-term investment, employees feel personally vested in the success of the business and are more likely to stick around.

Contract workers are experts in their field, being paid to share their knowledge and expertise to solve problems and help companies reach their goals. There is no need to train these employees on the subject since they are already knowledgeable coming in. This also means that contracted employees don’t have the same longevity that full-time employees do. Upon the completion of a project or when a goal is reached and their expertise is no longer needed, these workers don’t stick around unless their contract is being renewed for an additional project.

Employer Controls

By law, contractors have the right to dictate their own working hours. As an employer, it can be frustrating to not have your contractors available in the 9:00 – 5:00 timetable that most companies work off. They are also able to determine how and where they work as well as their own methods for completing the tasks you hired them for. Again, this takes some of the power out of the employers’ hands and places more into the contractors’ hands.

There is more control for employers when hiring full-time workers. Full-time employees don’t usually have the option to choose their own schedule or the methods in which they get tasks done considering the best practices of the company. This allows for a tighter authority over those you hire.

Cost Efficiency

Oftentimes, contractors are hired to supplement an organization’s staff while saving them the cost of hiring a full-time employee. When hiring a full-time employee, certain obligations must be met legally. PTO and benefits like medical and 401k are available to qualifying employees in a business, in addition to their initial salary. These costs add up quickly.

Hiring a contracted worker means that employers don’t have to offer benefits such as PTO (paid time off) when their consultants need time off. While this seems ideal, with employers thinking they will save a significant amount of money, consultants charge a higher per hour fee than full time employees to offset the lack of benefits. The costs of both may end up being relatively even in the end, so it can come down to expertise needed and convenience.

It’s more work and manpower on the employer’s end to hire a full-time employee, especially considering the possibility that it may not work in the end. If that’s the case, if an employee’s position is terminated, employers must consider unemployment benefits and termination costs.

The “Contract-For-Hire” Option

When neither of these options seems ideal for the position your looking to fill, employers can hire candidates for a contract-to-hire position. Hiring a full-time employee is a big investment that some businesses aren’t willing to plunge into right away. If this is the case, it is beneficial to both parties if employers hire a contractor who is willing to accept a full-time position after a specified amount of time.

If you as an employer decide that after the contracted amount of time is over, you would prefer to part ways, you simply do not hire them. Period.

With the popularity of independent contractors and freelance workers growing exponentially in the next few years, making an informed decision in your hiring process is vital. Both types of employees have aspects that will benefit your company. What you have to do is determining which is more beneficial.