Contractors vs. Employees As a person moves forward with a new company the key issue comes into play of hiring employees. One major question to ask as a business owner is whether or not to hire a full time ‘employee’ or a ‘contracted worker.’ In many companies and situations, not all employees can be lumped inclusively within one role, and the decision may need to be made on a case by case basis. As I move forward with my agricultural business I intend to review this decision for each paid associate. There are both advantages and disadvantages to having employees vs. contractors and I’ll discuss them as I move forward. Also, any other opinions are totally welcome to influence my view. The advantages of having a contracted worker over an employee are predominantly related to the financial aspect. However, there are other contributing factors as well. One such element is that for an employee the requirement exists for family and medical leave. Within this area is unpaid time off for various reasons including birth of a child, care of a spouse, or a serious health condition of the employee. Within the agricultural world, an employer can make a few allowances such as time off during the birth of a child through hiring additional hands and making sure everything was prepared in advance. However, one day could be all that is feasible depending on the point within the timeline. Not having to allow for this is a big advantage with a contracted employee. Another advantage is not having the burden of a possible retirement package or other incentive for the employee’s future. The first financial advantage is not being required to carry worker’s compensation or medical insurance for the employee. Though the employee can choose to take part in either role, the burden of the cost is not on the employer. In relation to taxing requirements, there are no requirements to withhold social security or income taxes during the payment process. And the last advantage is that without having an ‘employee’ releasing the person is an easier act than firing an employee. This can be a huge relief in the management process. The absence of a contract does bring many of the disadvantages to the front as well. The first is that people can leave more easily and the retraining process can be quite costly. The time to pay for the retraining of an individual as well as any lost financial gain. Within the chicken farm industry, bonuses are given out when birds are larger without using as much food and this is heavily dependent upon the worker’s input. Another situation is the inability to move a person from one area to another. The person is contracted only within one role and will maintain in that role unless they are willing to accept a possible shift. With an employee, the person can be re-assigned according to the needs of the company. Lastly, and in my opinion the biggest disadvantage, is less company loyalty. The person is there mostly for the sake of earning money and has less loyalty to the company and his or her role within that company. This lack of loyalty is seen as a huge disadvantage as I move forward and within my understanding of people. Though I hope to maintain loyalty of my employees over time and make allowances for other situations that may arise, the decision is best to hire contracted workers. Despite the advantages and disadvantages on both sides, the issue is best solved within that role. I plan to give percentage of the bonus to my employees and hope to keep the same workers for years but there are no guarantees for that to remain in effect.
Posted on: Mon, 24 Mar 2014 16:17:32 +0000
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