For many candidates and employers, the prospect of a contract job can be confusing. What is a contract job? How does it differ from a “regular” job? There are key differences between contract and traditional jobs, otherwise known as full-time (FT) or salaried positions. Contracted workers may perform similar tasks and contribute to the same teams as salaried workers. Still, the terms of their employment and compensation can be drastically different from those of their full-time counterparts.
Today, we will explore contract employment and attempt to answer one of the most commonly asked questions in the talent marketplace: what are contract jobs, and should I be hiring for them?
What is a Contract Job?
When candidates and hiring managers ask, “What is a contract job?” they usually are interested in learning what separates contractual opportunities from salaried positions.
A contract job is an employment opportunity in which an employee works for a company under a specific contract for a set period. This period may be dependent upon the completion of a project or series of projects. It may be limited to a predetermined duration, such as a six-, nine-, or twelve-month contract. Seasonal contracts are also common and usually span anywhere from three to six months.
While an internal, salaried employee may sign a contract before beginning work at a new company, they are not considered a contract employee. Full-time, salaried employees typically sign at-will agreements, meaning the employee works for their employer indefinitely with a mutual understanding and agreement that either party can end the employment arrangement for any reason, at any time, as long the reason is legal. Conversely, contracted employees work through the duration of their assignment as stated in their contract’s terms.
Salaried employees also receive benefits such as employer-funded healthcare plans, retirement contributions, and paid time off (PTO). In most cases, contracted employees do not receive these benefits. However, certain employers may choose to offer benefits to contract employees as an extra incentive in hopes of boosting contractor retention.
Read More: How to Get Into Contracting Work
Why Employers Hire Contract Employees
Now that we’ve identified the main differences between contract employment and salaried positions, the question shifts from “What is a contract job?” to “What are contract jobs going to provide my organization? What value does our company gain?”
Employers will often turn to contractors in large part due to the flexible nature of contract employment. Perhaps an organization has a major project they need to finish by the end of the quarter, and their headcount is far too low to accomplish this goal. One or more contractors can be brought on board to fill the gap and ensure that the project is finished by the deadline set by the company.
In other situations, contractors may join an organization to help with very niche workloads requiring highly specialized skills. Specialized contractors will often move from contract to contract, leveraging their vast technical knowledge and wide variety of skills to help firms with their projects. While the skills may be in high demand from said firms, the companies seeking them may not be able to justify the cost of bringing the contractor in-house for a full-time opportunity.
The required documentation to hire a contract employee is rather straightforward. A contract agreement, signed and approved by both the employee and the employer, must be in place. An employee-signed W-9 tax form and an independent contractor agreement (a separate agreement explicitly detailing the nature of the business relationship) are also needed to proceed.
How Hiring Contract Employees Can Be Cost-Efficient
Beyond specialized skills and temporary workforce solutions, employers frequently want to know how contract workers can help from a cost perspective. Many hiring managers are left wondering, “What is a contract job going to mean for our bottom line?”
Fortunately, contract workers are often very cost-efficient for a few reasons. As mentioned previously, employers are not required to provide contract workers with benefits packages, which can be quite expensive, considering the cost of programs such as 401k matching, stock-sharing plans, and childcare services.
It’s also common practice for companies to partner with dedicated agencies to recruit, hire, and train contract employees. Since these costs are typically built into the agreement with the agencies, companies can avoid spending additional time and funding on recruitment cycles for vacant positions and onboarding sessions for newly hired contract workers.
Ideal Contract Jobs and Common Titles
Positions such as project managers, quality engineers, IT consultants, software developers, and medical writers are almost always in demand. That said, if your organization is considering hiring contract workers, it’s far more important to evaluate whether or not contract employment makes sense for the project(s) at hand rather than to spend time and resources determining which roles could be converted into contract positions.
It’s critical to assess the needs of the project concerning the long-term needs of the firm. For example, if you are a hiring manager at a biomedical firm and your organization is conducting clinical trials that will require extensive documentation, you will likely conclude that a medical writer will be needed. If that project is projected to be completed within a few months and there are no additional projects scheduled requiring said medical writer, you may then proceed with your search for a contractor. This method is far more efficient than blindly gauging the importance of each role by comparing them to one another.
6 Pros and Cons of Taking a Contract Job
Disadvantages of Hiring Contract Employees
On the flip side of this conversation, hiring managers regularly inquire about the disadvantages of contract employment and the types of roles that don’t fit within the scope of a contractor, asking things like: What are contract jobs we should avoid recruiting for, and why? What makes it a poor choice for a contract position?
Again, the focus here should not be on the roles or titles themselves. It’s nearly impossible to classify roles as “good” or “bad” choices for contract employment by merely comparing the functions of each position in a general sense. The characteristics of the role to the projects at hand are far more telling.
Certain positions, such as project managers and software developers, are roles that many companies will list as full-time, salaried positions online. This means that individuals who secure employment at these firms will be more likely to stay for longer durations for the job security and additional benefits they receive. As a result, employees who secure these kinds of positions in contractor roles may be more likely to jump to a new role if a better offer is presented. In this case, the contractor’s role fails to incentivize the worker to remain loyal to the firm.
Contractors also typically work through an agency, meaning the company they work for has less control and supervision over them than they would with an in-house employee. This can be problematic if the direction of a project changes midway through the agreed-upon terms. Unlike a scenario in which an internal employee would simply follow a new set of instructions from the employer, a contractor’s agreement with the employer or third-party agency may prevent certain adjustments from being made to the employee’s responsibilities.
Read More: Why Treating Contractors Like Permanent Hires Will Help Your Business
About Black Diamond Networks
If you are still wondering about the answers to questions such as “What is a contract job going to look like at my organization?” or “What does a contract position mean for our hiring budget?” look no further than Black Diamond Networks.
Black Diamond can augment your firm’s sourcing and hiring efforts by introducing high-performing contractors to your organization’s workforce. Accelerate your operations and increase your internal efficiency with experienced contractors who specialize in overcoming your industry’s toughest challenges.
Our team leverages in-house expertise and resources to identify, attract, and secure top contractor talent across a wide range of positions. We source high-caliber contractors through our extensive, national network of on-demand contractors who possess the niche knowledge and skill sets for hard-to-fill positions.
Aside from candidate sourcing and delivery, the Black Diamond team takes pride in ensuring a quality outcome for all assignments. Our mission is to provide our clients and contractors with the tools and resources they need to succeed. We conduct regular follow-ups with our clients and contractors to provide an enhanced level of support for both parties as they work towards completing projects.
Specializing in the life sciences, engineering, and information technology sectors, our ability to rapidly deploy experienced, pre-screened personnel to complex projects is our key differentiator from the competition. It’s what enables Black Diamond Network customers to achieve project goals and meet deadlines, all while maintaining headcount, payroll, and administrative flexibility.
Interested in hiring your first contractor for an upcoming project? Learn how our team can connect your organization with exceptional talent by visiting our contact page today.