The traditional 9-5 job with office workers, structured vacations and benefits is on its way out. On its way in is the on-demand workforce – a workforce made up of one-third millennials along with other skilled workers that prefer flexibility to stability, vacation time to overtime and satisfaction to the step-ladder of promotions. This workforce currently accounts for 53 million Americans, or 34% of the population, according to Forbes.
What makes a freelancer?
This new workforce is “on-demand” because they are “freelancers,” or 1099 workers that work for themselves and independently contract themselves to companies on a project-by-project basis. They work for companies on a need basis, rather than full-time. These workers are often mistaken for temporary workers, who actually work through an agency to find a position, and are still issued W-2’s from employers (whether it be the company they work with or the staffing company they were hired through).
Mislabeling a freelancer, contractor or an employee can result in hefty legal fees and government-imposed penalties. For an overview of determining if your workers are considered “employees” or not, check out these seven tips from the IRS. Here is the main takeaway:
“The IRS uses three characteristics to determine the relationship between businesses and workers:
- Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.
- Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job.
- Type of Relationship factor relates to how the workers and the business owner perceive their relationship.”
Why use a freelancer?
Freelancers offer a great advantage to companies. They are specialized workers, so any project you need to have done can be handled by an expert in that field. Freelancers take advantage of technology and mobility, so they can be found online but physically located anywhere in the world, which is great if you have a need for someone with unique knowledge.
Your freelancer doesn’t need to be hired full-time, only for the specific project that you need to have done, with an agreed upon rate. This means you aren’t hiring full-time workers on a salary while also having to provide PTO, healthcare and other benefits.
Another advantage is that freelancers typically use their own assets. For example, Uber and Lyft drivers use their own cars. This saves your company money and reduces the risk of self-owned assets.
What does this mean for your business?
The new workforce of independent freelancers is only projected to grow, looking to be about 55% of the population by 2020. Your company cannot grow with the same strategies it grew with a decade ago; it must be forward-looking and plan now for this new workforce. This means having a freelance policy in place and potentially using Freelance Management Systems. These are systems that handle hiring and managing freelancers- similar to online staffing services, but with more compliance functions.
Your company can greatly benefit from using these highly skilled workers. If you ignore this community, you are likely missing out on top talent and getting behind your competition. What is your company doing to embrace the new workforce?