What is a contingent worker?
Not everyone who works for a company is considered an employee. Sometimes they are contingent workers. If you think it sounds vague and confused, it is. So, let's explain the basics to help you understand the contingent meaning, type of work you do and why it is important to pay attention to how you define the people who work for you.
What Contingent Worker Means?
In general, contingent workers are hired to carry out specific project tasks under a type of written agreement or contract. Technically they are not employees of a company, so the employer has no responsibility for providing work permanently. Since they work for themselves and not for the employer, contingent workers enjoy a certain degree of independence.
contingent workers and independent contractors
what does contingent mean? You can know them by one of their many other names: independent contractors, temporary workers, independent workers, consultants, workers provided by contracted companies, leased employees, call workers, temporary assistance agency workers, "1099 workers" (requested tax document which shows your compensation) and interns.
Contingent workers are generally not paid, do not receive benefits (such as medical insurance and PTO) and are responsible for paying taxes because they are independent workers. The employer does not deduct federal payroll taxes, which is the main reason why defining workers correctly is a big problem for employers. If you mistakenly classify a worker as an independent contractor when you are actually an employee, you must pay past taxes, including social security and state medical care (FICA) and unemployment taxes. Other issues related to employees include record keeping, compensation management and wage and hourly compliance requirements, such as overtime pay, workers' compensation and family medical leave (FMLA).
Questions to help you think:
Does the worker or employer provide the necessary equipment and tools?
Is the work temporary or permanent?
Does the employer or worker verify work hours?
Can the worker choose whether to work or not (without being afraid of being fired)?
Does the worker have independence on how the project or activity is carried out?
Safe Harbor (Help Section 530): Tax returns indicate that you treated workers as independent contractors and that you have a previous history of treating similar workers (in the same position or in a similar position) as independent contractors.