The Benefits of Hiring Contract Workers
By Matt Deutsch
EmploymentTools.com Editor

Despite all of the unpredictability that’s existed in the marketplace during the past several years, there’s one thing that’s remained the same: hiring contract workers can be a logical and beneficial step for a company looking to reach its productivity goals and save money.

And it doesn’t matter if the economy is good or bad.  In fact, contractors are more of viable option when the economy is experiencing a recession.  Such was the case when the last recession began.  Companies that weren’t able to add more permanent employees turned to contractors in order to meet deadlines and complete important projects, all while staying within their operating budget.

And contrary to popular belief, there are candidates who prefer to work on contract assignment, mainly because they enjoy all of the benefits that go along with doing so.  These benefits include flexibility of schedule, the opportunity to travel more, getting paid for every hour they work, and the chance to increase their knowledge and their marketability.

But candidates aren’t the only ones reaping the benefits in a contract situation.  There are plenty to be had for the company, as well, and not just the ones I mentioned toward the beginning of the article.  By hiring contract workers, you’re able to leverage your resources and create more flexibility for everybody in your department.

At the present time, approximately 70% to 80% of companies across the country utilize contract workers.  In recent years, more and more companies are utilizing these workers in some capacity, and that percentage is expected to rise even higher in the future.  Regardless of your company or the industry in which it operates, hiring workers on a contract basis can have a positive impact on your bottom line—now and in the future.

Top Echelon Contracting, Inc. has been providing contract staffing services since 1992.  Top Echelon Contracting places people in technical, professional, and healthcare contract positions nationwide.  Debbie Fledderjohann is the president of Top Echelon Contracting.  We sat down with Debbie and asked her some questions about the benefits that contracting offers to companies.

Employment Tools: When somebody works a contract position through Top Echelon Contracting, who’s the employer in that situation?

Debbie Fledderjohann: We become the legal W-2 employer for the candidate and handle all of the administrative, financial, and legal duties associated with the hire.

ET: Does that mean you’re the one who cuts the check for the contractor?

DF: Absolutely, and we make it one of our top priorities to ensure that our contractors receive their paychecks on time.  Since we started in 1992, we’ve never missed a payroll.

ET: So you’re the legal employer for the contract candidate, who works for the company.  What obligations does the company have?

DF: We issue each employee a timesheet with their initial hire paperwork.  The timesheet must be signed by both the employee and a company representative in order for us to process the payroll.  After that’s been done, the employee must fax their timesheet to us by the deadline in order to receive a paycheck that week.  So, making sure to sign the timesheet is of paramount importance.  The only other obligation is to pay the invoice for the man hours worked on the timesheet.

ET: What, in your mind, are the primary reasons that companies should consider hiring workers on a contract basis?

DF: There are many reasons, all of which can help a company operate more effectively and efficiently and contribute to a bigger and better bottom line.  First, let’s talk about the things you can reduce.  These include employment costs, payroll tax issues, benefits administration, unemployment exposure, and workers’ compensation exposure.

What you can increase is your staffing flexibility, and you can also maintain greater control of your budget.  And perhaps most importantly in today’s market, you gain protection against employee misclassification in the eyes of the Internal Revenue Service.

ET: Employee misclassification?  What’s that?

DF: When a person is paid on a W-2 form, the employer automatically withholds and pays all of the necessary employee income taxes as required by the IRS.  But when a person is paid on a 1099, all money earned by the individual is paid on an untaxed basis. It’s then the responsibility of the individual to file and pay the appropriate taxes.

The problem is that the IRS has found that when an individual is responsible for paying their own taxes, many times it’s not as much as it would be when the employer is paying those taxes. This is primarily due to workers taking full advantage of any potential business deductions so they pay less in taxes. As a result, the IRS is cracking down on misclassifications and imposing some hefty penalties—and nobody wants to have to deal with that.  So as you can see, it’s extremely important that workers are properly classified and that proper taxes are paid to the correct government entities.

ET: What kind of benefits can your contract employees expect to receive?

DF: We offer many different benefit options, and employees can choose any combination they’d like.  Our benefits include health insurance, dental, vision, life insurance, AD&D, 401k, and Aflac.  The majority of the benefits can be paid for with pre-taxed payroll deductions.  Health insurance is our most popular benefit.  Top Echelon Contracting actually pays half of the premium for the “employee.”

ET: Can you tell us more about the healthcare benefits that you offer?

DF: We now have two new health insurance plans available to employees who work an average of 30 hours or more per week.  One is a base plan and the other is a premium plan.  We have a health insurance benefit summary located online that provides details about each of these plans.

ET: Is there a waiting period for your benefits?

DF: Top Echelon Contracting employees are eligible to receive their benefits on the first of the month after they’ve worked for 30 days.

ET: What about background checks and drug screenings?  Does Top Echelon Contracting take care of those?

DF: Absolutely.  Top Echelon Contracting's policy is to conduct a criminal background investigation on all of our employees. After we receive a release form from the employee, we coordinate this effort through a national investigation firm.  If the company wants a more extensive background check, we can do that, as well.

In addition, it’s Top Echelon Contracting's policy to conduct a drug screen on all healthcare employees. We also have the ability to provide a drug screening for non-healthcare employees at the client's request.  We have a national account with a certified drug screening facility, and we process the Chain of Custody Form and direct the candidate to a local collection site.  Testing can be done on a pre-placement or a post-placement basis.

ET: Does Top Echelon Contracting offer insurance protection?

DF: Yes, we do.  In fact, we carry a comprehensive package of insurance.  This includes commercial general liability, professional liability, commercial excess liability, hired and non-owned automotive liability, employer practices liability insurance, employee dishonesty bond, and employee forgery bond.

ET: Now, what is the Employer of Record Rate Calculator™?

DF: If you have what you consider to be a perfect candidate, but you don’t want to hire them as an employee, you can hire them through our Rate Calculator service.  For a nominal cost, Top Echelon Contracting can become the candidate’s employer and handle the taxes, insurance, benefits, payroll funding, and payroll processing, among other things.  All that the company has to do is pay one simple invoice.  You can visit our Rate Calculator online to help determine the hourly pay rate and bill rate.  (Click here to access the Top Echelon Contracting Employer of Record Rate Calculator.)

ET: Debbie, thanks very much for taking the time to speak with us today.

DF: Thank you.  I appreciate the opportunity to talk about contracting.

If you’d like more information about Top Echelon Contracting, you can visit them online at www.TopEchelonContracting.com.

You might be surprised to know that working a contract assignment can provide benefits to your career that working a perm or direct hire position cannot.

In the past, contract or temp positions have been considered less secure as so-called permanent jobs, mainly because there is usually a set date for completion of the project.  That, of course, means the end of the person’s employment with that company, at least as far as that specific contract is concerned.

During the last 10 to 15 years, things have changed dramatically in the workplace and in the job market.  The days of employees working for 40 years at the same company and then retiring with a gold watch and a pension are gone.  It is not uncommon for people to work at multiple companies during the course of their career, and such a trend is no longer viewed as “job hopping” by hiring authorities.  For many high achievers, such a pattern is simply an indication of their continued growth and their progression up the career ladder.

And that’s where contracting comes in.  Accepting a contract position, for whatever reason, shouldn’t be viewed as a step backward—or even sideways—in terms of your career.  In fact, working contract can have a tremendously positive impact on your career overall.  It can be, in essence, an opportunity, an opportunity to learn more, to see more, and to experience more.  And if there’s one thing that companies are willing to pay for, on a contract basis on in a permanent capacity, it’s people with the experience they need to solve their problems.

Top Echelon Contracting, Inc., the recruiter’s back-office solution, has been providing contract staffing services since 1992.  Top Echelon Contracting places people in technical, professional, and healthcare contract positions nationwide and has a tremendous amount of experience in helping candidates achieve their career goals and ambitions.

Debbie Fledderjohann is the president of Top Echelon Contracting.  We sat down with Debbie and asked her some questions about the benefits that contracting offers to employees.

Employment Tools: When somebody works a contract position through Top Echelon Contracting, who’s the employee in that situation?

Debbie Fledderjohann: We become the employer for the candidate and handle all of the administrative, financial, and legal duties associated with the hire.

ET: Does that mean you’re the one who cuts the check for the contractor?

DF: Absolutely, and we make it one of our top priorities to ensure that our contractors receive their paychecks on time, regardless of any delays that might occur at any other point in the process.

ET: What do the employees need to do in order to get paid?

DF: We issue each employee a timesheet with their initial hire paperwork.  The timesheet must be signed by both the employee and the company in order for us to process the payroll.  The deadline is each Monday by 1 p.m., EST.  If the employee faxes their timesheet by the deadline, a paycheck is mailed to their home address each Thursday afternoon.  However, we also offer direct deposit.  With that option, the money is deposited into the employee’s bank account each Friday.

ET: What, in your mind, are the primary reasons that people should consider working on a contract basis?

DF: There are almost too many for me to list.  First of all, there’s the flexibility of schedule that contracting offers, as well as the opportunity to travel more.  Then there’s the fact that you’re paid for every hour that you work, including overtime in accordance with the Fair Labor Standards Act.  With a salaried position, that’s simply not the case.  Along with that comes a weekly paycheck, in contrast to getting paid once or twice a month.

And then there’s the opportunity to increase your technical and professional knowledge.  The projects you complete during contract assignments make great additions to your portfolio, as well as to your resume.  But the experience you receive might be even more important than that.  By gaining exposure to a number of different working environments and situations, you can increase your marketability to other companies in the future.  And in many instances, contract workers are then hired by the companies on a permanent basis.

ET: How often does that last scenario occur?

DF: It’s called a temp-to-perm or temp-to-direct hire situation.  After an employee’s contract runs out, the company has the option of then hiring the person on a full-time basis.  This is becoming a common practice with companies, especially those looking to see how the employee fits into the overall culture of the company.  If the fit is good, they take the next step and hire them full-time.

That’s yet another good reason to consider working on a contract basis.  Not only are contract assignments sometimes extended for an indefinite period of time, they’re converted to permanent positions, as well.  You just never know what can happen when you seize the opportunities that contracting can offer.

ET: What kind of benefits can your contract employees expect to receive?

DF: We offer many different benefit options, and employees can choose any combination they’d like.  They include healthcare, dental, vision, life insurance, AD&D, 401k, and Aflac.  The majority of the benefits can be paid for with pre-taxed payroll deductions.

ET: Can you tell us more about the healthcare benefits that you offer?

DF: We now have two new health insurance plans available to employees who work an average of 30 hours or more per week.  One is a base plan and one is a premium plan.  We have a health insurance benefit summary located online that provides details about both of these plans.

ET: Is there a waiting period for your benefits?

DF: Top Echelon Contracting employees are eligible to receive their benefits on the first of the month after they’ve worked for 30 days.

ET: Debbie, thanks very much for taking the time to speak with us today.

DF: Thank you.  I appreciate the opportunity to talk about contracting.

If you’d like more information about Top Echelon Contracting, you can visit them online at www.TopEchelonContracting.com.  If you’d like to read testimonials from some of the people they’ve played on a contract basis, click here.