What is a Contingent Worker?

Key differences include: Employment relationship (contingent workers are not employees, either self-employed or employed by agencies), benefits (contingent workers typically don't receive company benefits), control (companies have less control over how contingent workers perform tasks), duration (usually defined engagement periods), and tax treatment (different withholding and reporting requirements).

It depends on how you calculate. Contingent worker hourly rates are often higher than employee equivalents. However, when you factor in benefits (15-30% of salary), payroll taxes, overhead, recruiting, training, and severance, contingent workers may cost less for defined projects. The real question is fit-for-purpose: permanent needs warrant employees; variable needs suit contingent workers.

Primary risks include: misclassification liability (treating employees as contractors), co-employment claims (if contingent workers are treated too much like employees), IP and confidentiality (requires proper contracts), knowledge continuity (contingent workers leave with their knowledge), and cultural integration (balancing inclusion with contractor boundaries).

There's no universal limit, but prolonged engagements increase misclassification risk. Many companies set internal tenure policies (e.g., 18-24 months maximum) to demonstrate the contingent nature of the relationship. Some jurisdictions have rules that trigger employee status after certain periods. Best practice is reviewing long-term contingent relationships for conversion or rotation.