What’s some best practices for hiring an independent contractor?
To help you follow the best approach in engaging independent contractors, we asked HR managers and business leaders this question for their best insights. From having insurance in place to setting clear expectations and boundaries, there are several tips that should serve as your best guide when hiring an independent contractor.
Here are eight best practices these leaders follow when hiring independent contractors:
- Have Insurance in Place
- Leave Room for the Opportunity to Work for You as a Staff
- Check Recent Samples of Contractor’s Work
- Have a Written Agreement With Clear Terms
- Ensure the Contractor Aligns With Your Core Values
- Use the Relevant IRS Test to Ensure Correct Classification as Employee or Independent Contractor
- Offer More Flexibility to Contractors
- Set Clear Expectations and Boundaries
Have Insurance in Place
When it comes to hiring an independent contractor, best practice is always to have an insurance requirement in place. This will protect you, the business owner, from any potential damages or accidents that may occur during the course of business. For example, if an employee of the contractor were to injure themselves on your property, you would be liable for their medical bills and any lost wages. Similarly, if the contractor were to damage your property, you would be responsible for the repair costs. By requiring insurance, you can ensure that you are not held liable for any unexpected mishaps. In addition, it is always a good idea to request references from the contractor before making a final decision. This will allow you to speak with other businesses or individuals who have used their services in the past, and get a better sense of their quality of work.
Leave Room for the Opportunity to Work for You as a Staff
Create pathways to staff employment. Some independent contractors prefer that working style, but many begin looking for more stable employment over time. If you’ve hired a great contractor and want to retain them, it’s important that they feel like they have an opportunity to get hired to staff and access benefits. This can also help you hire the best and brightest contractors, as many are interested in this option. If you want to get and keep a great contractor, give them long-term opportunities.
Check Recent Samples of Contractor’s Work
Look for up to date samples in your potential contractors profile or on their webpage. Recent samples demonstrate not only their prowess at the job, but that they’re also still actively maintaining their business. This is a good way to make sure that the person that you’re hiring isn’t just relying on old glories to sell their services. If their online samples are older than a handful of years then it may be better to disregard them and focus on more recent work examples or look for a contractor with more recent successes. An active professional presence accompanied by a strong and up to date portfolio is going to be one of your best ways to judge how effective a contractor is at the job before hiring.
Have a Written Agreement With Clear Terms
Independent contractors typically don’t receive the benefits granted to your employees. Make sure that you put the terms of the working relationship in writing and be cautious about your word choice – ensure that there is no confusion as to their role and responsibilities, the pay, and what benefits are, or are not, provided. It’s also worth considering sending the agreement to an attorney for further review before sending to a contractor.
Ensure the Contractor Aligns With Your Core Values
Just because they’re an independent contractor doesn’t mean they should be a random hire. For example, you want your independent contractor to still be like-minded when it comes to core values and work ethic, otherwise their work will likely not be conducive with the rest of your business. Though the hiring process doesn’t need to be as intensive, it’s still important to ask some of your go-to interview questions before bringing an independent contractor on board.
Use the Relevant IRS Test to Ensure Correct Classification as Employee or Independent Contractor
A best practice when it comes to hiring an independent contractor is to view the IRS 20-factor test or the IRS common law test. This test looks at the behavioral controls, financial controls, and the relationship of the parties and will help determine whether the individual should be classified as an employee or an independent contractor.
Offer More Flexibility to Contractors
Give them more freedom than staff employees. When you’re an independent contractor, you don’t have all of the benefits and stability that full-time staffers do. Since employers rarely offer full benefits or job security to these workers, it’s important to give them a little more room to breathe. Things like offering remote work, flexible scheduling or part-time opportunities can all help you hire great contractors and keep them with you long-term.
Set Clear Expectations and Boundaries
Having a contract that outlines all expectations and boundaries you have for your independent contractor is key in indicating what type of work should be done. You ideally want your contractor to know exact timelines for whatever projects you’re asking them to complete and how check-ins are going to look like. You must also set boundaries in terms of what tools or resources they have access to from your end, if they have access to any intellectual property and confidential information, and how involved they are going to be in your company in general. Boundaries should also be set on your end as well so you don’t overstep them as they aren’t an official employee. Having these expectations and boundaries in place will ensure that any project you ask them to do will get done efficiently and successfully.
Jacob Dayan, Co-founder and CEO, Community Tax
Submit Your Answer
Would you like to submit an alternative answer to the question, “What are some best practices for hiring an independent contractor?” Submit your answer here.