The Growing Contingent Workforce

This week, I had the chance to talk to a contractor who has been working for an established company for about a year doing office work.  He wishes to remain anonymous so we’ll call him Joe.

Joe is about to finish up a contract - one that is very similar to contracts workers have with larger organizations. You now see this more and more with large tech giants like Google getting heat for the major discrepancies between full-time employees and temporary workers or temps.

Joe’s story sheds light on this growing workforce of contractors and temps. Here he shares his honest opinion and experience, highlighting both the pros and cons of this arrangement. More importantly, however, his story uncovers the discrepancies that arise from having to answer to both a temp agency and a large company. When hiring and work policies are not put in place, it is oftentimes the contractor who gets caught in the middle.

Hiring Best Practices: Traditional Workers vs. Contingent Workers

A look at contracting from all angles: Freelancers vs Contract Workers

Like all contractors, Joe calls out flexibility as the main advantage of contracting. In his case, however, he is still operating under the same conditions as a full-time employee. Whereas as freelancers have the freedom to create their own schedules and work their own hours from any location, Joe doesn’t fit in this category. He is a contractor which means he is still expected to go to the office and work the same business hours as everyone else. “Honestly,” Joe says, “I would rather be in a permanent position. Contractors have less responsibility than permanent workers.”

Freelancing in Today’s Gig Economy

A contract worker is someone companies hire directly. They are retained for a fixed period of time. Sometimes they are brought in for such extended missions as maternity or family leave fill-ins. Such contracts may last upwards of six months, a year, or longer. In Joe’s case, his contract was initially for six months with the possibility of being converted to full-time employee status. More on that later...

The challenges of being a long-term contractor

At first glance, having a year contract with a company looks like a great deal. It ensures contractors some sense of stable salary and a steady schedule.

When you dive deeper, however, contractors have no guarantees. Since the organization may not be sure if they are converting a contractor to full-time status, they may not want to put resources into training them or providing them with the skillset to take on more responsibilities. “I have made it clear to my bosses that I want to learn more and have more responsibilities at work. I want to sit in on meetings on how deals are put together with other departments on the speaker phone. But they seem to want to do that work themselves or perhaps they know my assignment will end soon so there is no point in teaching me all that new info. It is rather frustrating because I have had so little to do at work these past few months. There are days that I literally do one task that takes ten minutes and I have nothing else all day. And since I am paid hourly, I have to be there if I want to get paid. I am effectively a glorified data entry person. I maintain the data in several logs and databases. But it isn't challenging or interesting. And that will end up being a year of my life. But at least I have current work experience with a well known company on my resume now.”

As a result, this can lead to frustration for contractors. Joe describes his biggest hurdle as a “lack of career upward mobility.” He has not been notified yet if he is being converted to full time and his contract is ending soon so he is having to constantly look for work and apply for new jobs while working this job.

Joe describes this uncertainty at the end of his contract as leaving him “unable to plan my life or time very well. I love traveling internationally and haven't been able to do that since I started working at my current company. I'm grateful to have gotten work there but if I take any time off then I am not getting paid and it also reduces the amount of unemployment I can receive later when the job ends. I don't get vacation or sick days or employer contributions to 401k.”

Being a contractor hired through a temp agency

The term “contractor” and “contract work” doesn’t just apply to short-term jobs. Even though Joe is a contractor, he was hired through a temp agency so this means he is working within the guidelines of both the agency and the company. In Joe’s case, his original contract was for six months. He is paid hourly and up to 40 hours/week. Then, near the end of that six months, Joe was informed they were extending him another six months.

“I'm glad I was getting more work because they have been very nice to me and my office has been a pleasant place to work,” says Joe. “I've worked some really bad temp jobs. So I am lucky. But I was also really looking forward to some time off to rest and travel.”

A closer look and sick pay and time off

Let’s look at how Joe’s sick pay is calculated. Through the temp agency, Joe only gets three paid sick days off each calendar even though he earned 7-8 days of sick pay. There are only a few major holidays where he gets paid such as Christmas, Thanksgiving and New Years Day, Memorial Day, Fourth of July and Labor Day. He only gets paid on those holidays if he has been on a continuous job assignment for at least 90 days before any of those holidays happen. If the job is less than 90 days, he doesn't get paid for that holiday.

On MLK Day and Presidents Day, for example, Joe’s company was closed so he could not go into work and since his temp agency doesn't recognize those holidays, he was not able to get paid on those days. So for this year, Joe already had to use 2 of his 3 paid sick days for MLK Day and Presidents' Day because he wasn't allowed to go to work or work from home and my temp agency wouldn't recognize those holidays as major holidays to pay him.

So for the last ten weeks of this job, Joe has one sick day left to use. “When I end up having any unused sick pay hours left when my job ends, I cannot cash them out. I can use them again if I get another job through them with same temp agency within a year, I can use those leftover sick pay hours. But if I go past a year from the end of my current job, then those sick pay hours will expire.”

A division of labor: Contractors vs Full-time Employees

“I believe there is a stigma attached to contractors,” Joe points out, “and that they are often looked down upon.” This is a sentiment that is also mirrored by gig workers and millennials. This opinion has become particularly salient in places like Silicon Valley where white-collar contractors often don’t work directly for tech companies but for third-party staffing firms.

“I wish as a contractor I got more challenging or interesting work to do.” Joe continues, “I know there are labor laws prohibiting this because otherwise the company can be seen as taking advantage of contractors. But if I don't learn new skills on the job, how am I supposed to become more useful for the next job? Or be in a good position to get offered something permanent?”

Advice for people thinking about going into freelance or contract work?

“Have a solid skill that will get you good paying and in demand contract work,” Joe advises. “Be proficient in excel or tableau or accounting or social media. Also know why you want to be freelance rather than permanent position. Are you trying to pursue a dream career or start your own business? It takes a lot of time and energy to look for work. Going to work is hard enough. Its very hard to do both.”

Contract Workers vs. Employees – The Impact of Worker Classification on Business

Looking back after a longer-term contract has ended

Within the contingent workforce, there are many options people now have - from freelancing to temping, to gig work. “My current company has been by far the best temp experience I've had,” says Joe. “But I don't want to work for them as a temp anymore. I want a permanent full time position with benefits with them if I work for them again.” While flexible arrangements are what drive people to overlook benefits, this is a case where having benefits outweigh the perceived flexibility.

Conclusion

Not all workers are created equally. That rings true both for the performance and output exuded by an individual worker and also for the classification a worker falls under. Thanks to the skyrocketing rise of the on-demand economy, it’s no longer accurate to say all workers are either full or part time. Rather, this new wave of contingent workers is a class of its own — one that comprises a rainbow of employment designations, from contractor to freelancer, to gig worker and moonlighter.

Because there are so many different types of workers today, and each of them is looking for unique work that suits their needs and desires, the old-school hiring handbook is quite simply out-of-date and inapplicable to many potential employees. Sure, there are still millions of people who relish in a traditional, 9-to-5, full time job position. However, more than 53 million U.S. workers (34% of the workforce) took part in freelance work in 2014. In 2017, contingent workers — which includes freelancers, independent contractors and statement-of-work laborers — will make up 45% of the American workforce.

In order for companies to hire this ever increasing pool of talent, they need to re-strategize their hiring practices. The old-school hiring handbook is a handbook for a reason — it worked for decades in recruiting and hiring people for the more traditional forms of employment that dominated those days. The rise of the on-demand economy and the new variations of workers necessitates a retooling of this book, or a separate one altogether. These distinct workers want different things out of their jobs, which means recruiters and HR professionals have to approach, attract and hook them differently than they would someone seeking more traditional employment.

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