Contingent Workers: Definition, Types, Income, Pros & Cons

Contingent work has become more popular over the years.

In 2017 there were over six million contingent workers, which continues to grow as more people use online platforms to find temporary jobs.

Since contingent work is so accessible lately, businesses are also looking into this field, providing a healthy market for many workers.

So businesses and workers are looking into contingent work, but what does this mean for you as an employee, temp worker, or business owner?

Here’s what you should know about contingent workers and how they can benefit you or your business.

What Does Contingent Mean?

The definition of contingent has a few meanings, but it means to be dependent on or conditioned by something else.

In the case of contingent workers, workers depend on their temporary employer for payment, and the employer depends on the worker for their services.

What Is a Contingent Worker?

A contingent worker is a freelance agent who works for a business on a contract or as-needed basis.

Contingent workers are independent and aren’t on the company’s payroll.

The model on which the gig economy is based is resemblant to harvesting forces that large farms would hire during harvest time to get the work done.

They weren’t permanent farm employees but were necessary to keep production going.

Is a Contingent Worker an Employee?

Contingent workers are not employees.

Contingent workers don’t follow the same rules as company employees.

Depending on the business they’re working for, they’re paid separately and only after completing the agreed-upon job.

What is the Difference Between a Contingent Worker and an Employee?

The main difference between contingent workers and employees is their relationship with their employers.

Employees have a permanent and ongoing relationship with the business they work for, while contingent workers only have a temporary connection.

While contingent workers may have ongoing relationships with businesses, AB-5 legislation exists to help clarify the relationship between the two.

This clarification is important since it will affect the relationship’s taxes, benefits, and other details.

What is the Difference Between Temporary and Contingent Workers?

The biggest difference between contingent and temporary workers is how businesses pay them.

Temporary workers are paid similarly to employees meaning they’re on the company payroll.

Other than that, there isn’t too much of a difference.

Temporary workers usually associate themselves with agencies to help find them gigs within the market.

Additionally, they can keep permanent positions if they or their employer deem it appropriate to keep them around.

Contingent workers will do their contracted job, receive payment as self-employed workers, and won’t typically stay around for permanent positions.

Examples of Contingent Workers

While there are numerous examples of contingent workers, here are three common examples you’ll run across.

• Freelancers: Most freelancers fall under the category of contingent workers. Freelancers choose the work they take and apply their skillset temporarily to businesses. Most freelance workers use online platforms or take on jobs via recommendations from peers.
• Consultants: These are the people that apply their expertise in a certain field. Most consultants help provide temporary services to businesses, like teaching them how to train their managers. Consultants differ from freelancers in that they thrive off building long-lasting relationships.
• Gig Worker: The definition of a gig is as simple as temporary work. Most gigs don’t last and gig workers tend to work for multiple clients at a time. Examples of gig work include coaching, freelance writing, digital marketing, and transportation services.

Why Do Companies Use Contingent Workers?

Contingent workers have become extremely popular as more businesses try to save money and adapt to competitors.

Currently, the gig economy is on the rise because of online platforms and easy access to job positions without the complexity of going through training, hiring, and payroll processes.

When Would a Contingent Worker Be Used?

Businesses will use contingent workers to save money, time, and company resources.

Contingent workers provide extra perks to businesses without fully committing to a plan.

For example, businesses will hire consultants to train their managers in new management methods.

Instead of going through a new hiring process, business benefit from adding skill sets to their current employees.

Contingent workers are especially nice for specialized processes that businesses do not employ regularly but require personnel to operate when they need them.

What Notable Companies Use Contingent Workers?

Plenty of companies are starting to see the inherent advantage of contingent workers.

Most companies that rely on the gig model benefit from deep analysis, creativity, and innovative approaches.

Here are some top companies that use contingent workers for just those reasons.

• Walmart: Marketers typically gravitate towards Walmart because of how often they hire. To improve its company and brand image, Walmart often hires freelancers and contingent workers for digital marketing, technical support, and analytic positions.
• Nintendo: Nintendo is one of the most prominent gaming companies in the world and is constantly hiring freelancers to provide innovative ideas for their games. Nintendo also hires contingent workers to help test their games during their early beta phases.
• Meta (Facebook): Meta is undergoing a massive overhaul in the company’s priorities and innovations. Meta is actively hiring freelance developers to help improve its VR digital platform. Additionally, Meta is hiring writers to help create content for their new projects.

Pros and Cons of Contingent Work

Contingent workers provide massive benefits, but there are inherent drawbacks to it.

Before forming an opinion about contingent work, consider these pros and cons.

Advantages of Contingent Work

The main advantages of contingent work come from how much a business will save on top of its flexibility when hiring contingent workers.

• Cost: Businesses don’t have to provide contingent workers the same benefits as their employees. Additionally, contingent workers bypass the need for training, and businesses don’t have to pay hiring fees unless they go through a talent agency.
• Flexibility: Businesses can hire contingent workers for almost any reason. The flexibility of adding extra hands onto projects, gathering data, or needing an expert opinion on a subject your business isn’t familiar with is more than reason enough to consider contingent workers.
• New perspective: While not all businesses are open to the idea, most believe that a fresh perspective help companies grow and adapt to new environments. Hiring a new set of eyes has proven to be just what a business needs for innovative breakthroughs.

Disadvantages of Contingent Work

While the benefits of hiring contingent workers are obvious, the downsides may be less obvious.

Here are some drawbacks to consider when hiring contingent workers.

• Lack of control: While businesses hire contingent workers to complete a job, they don’t have control over how those workers will complete the job, except for laying out task-specific work requirements. Since businesses can’t micromanage, it leaves opportunities for poor-quality work and lost time or money.
• Legal disputes: Numerous legal disputes can arise between contractors and businesses. Both companies and workers must protect themselves from the potential legal harm of their relationship.
• No stability: For contingent workers, there is no job stability. Once you complete a job, you move on to the next job available, assuming there’s work to be found.

How Much Do Contingent Workers Make?

According to Glassdoor, a contingent worker can expect a medium pay of $43,628 annually.

Even so, this number fluctuates depending on the job and the worker.

Contingent workers are free to charge what they want and work for whom they want.

Additionally, some positions will naturally pay more, as consultants and freelancers tend to make more money than other gig positions.

How are Contingent Workers Paid?

Most businesses will pay contingent workers per project completion.

Some workers will receive payment before, after, or a mixture of both, but it is often important that the worker completes the job before receiving full payment.

Frequently Asked Questions

There’s plenty to cover with contingent workers, so here are some answers to lingering questions you may still have about them.

Wrapping Up

Contingent workers have opportunities that normal employees don’t get.

Most contingent workers have flexibility, freedom, and the potential to earn more than normal employees.

Businesses also benefit heavily from contingent workers because of cost and flexibility.

Business owners wanting to hire contingent workers should browse to see what’s available.

There are plenty of online platforms that provide you access to plenty of freelancers.

If you want contingent work, consider looking into those online platforms too.

Do you have any questions about contingent work that we didn’t answer? Feel free to ask them below!