Here at YES! Your Human Resources Solution, we understand these tough economic times can drive companies to review their staffing efficiencies.  Important questions to ask include, Does your company have enough staff?  Too much?  The right kind of employees?  Is there a way to streamline the cost of the employees you do have?

One cost-effective way to streamline staff could be to use freelance workers.  Freelancers come with well-developed skills and fresh ideas, which can help your company get a competitive edge without permanently adding to overhead.  For many companies, they can offer more affordable and flexible alternatives to permanent in-house employees—but they’re not the right choice for every business.

To help decide if freelancer workers are a good choice for your company, take a look at our pros and cons of hiring freelancers.

PROS:

• Cost savings.  A freelance employee often costs more per hour than a permanent in-house employee, but a worker’s overall cost includes much more than wages.  Unlike in-house employees, freelancers do not require the company to pay for medical insurance, office space, or equipment; they pay for those themselves.  They also take care of their own Social Security contributions, workers’ compensation insurance, Medicare, and unemployment insurance.  This might not sound like much, but it can add up to big savings for your company—from 20–30 percent per employee.
• Flexibility.  Hiring freelancers means always having the right staff at the right time, whether that’s on an ongoing basis or for a two-week project.  Freelancers can supplement staffing levels when the workload seasonally (or suddenly) increases, and full-time, permanent staff is neither necessary nor practical. Specific freelancers can work with the company long term or can be rotated out to foster fresh perspectives, without the hassle of hiring and terminating permanent employees.  It can also be easier to locate and hire qualified freelance workers based on references.  And as a point for both flexibility and cost savings, since freelancers typically offer specialized knowledge and experience, they can bring maximum productivity right away—no waiting for lengthy or costly training to get employees up to speed.
• Legal benefits.  Many employment laws that protect permanent employees do not apply to freelancers, thereby limiting the number of legal pitfalls your company can encounter when working with them.  Any legal requirements and ramifications are typically spelled out in the service contract.  Unless explicitly included in the service contract, laws that don’t apply include minimum wage, overtime compensation, family leave, and wrongful termination.  The fewer the laws to balance, the fewer the potential legal troubles.

CONS:

• Control.  Control-oriented employers probably won’t want to manage a fleet of freelancers, because employers are limited on how they can direct projects.  Namely, employers can tell freelancers what project they want done, but not how freelancers should go about that task.  That what/how line is a defining factor in the IRS definition of an employee.  If you’re telling your freelancers how to accomplish their work, you’re treating them like employees and you could come under fire from one or more . . .
• Government audits.  IRS, FTB, and OSHA, oh my!  And those are just a few government agencies that could potentially audit your company’s employee classifications.  Your freelance workers can also ask the government to evaluate whether they have been correctly classified as contractors.  Common sense and careful adherence to employee regulations are the keys to correct classification, but make a mistake and beware—misclassifications can mean stiff penalties.
• Flexibility.  “What?!” you say.  “Wasn’t flexibility also a pro?”  Yes, it was, but a flexible workforce also comes with a price, and that price is workers that frequently rotate in and out of the company.  While freelancers won’t need training at their craft, they’ll likely need educating about the company and its goals.  There is also no guarantee that the quality of work will be consistent from freelancer to freelancer.  If you don’t feel like dealing with this every few months, a long-term freelancer or a permanent employee might be a better option.

With a little patience and planning, freelancers can be a real asset to many workforces, but they’re not for every company or industry.  At the end of the day, the decision to hire freelancers is a complex choice individual to each company’s needs.  If you could use a qualified, professional opinion about how to optimize your workforce, give the friendly HR consultants at YES! Your Human Resources Solution a call or visit our website.  Take advantage of our free consultation to see how we can help guide your unique business toward continued success!