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With today’s ever changing economy employers are being forced to learn new and inventive ways of meeting their hiring needs. Contract employees are becoming more and more popular. San Francisco, CA employers are following the nationwide trend of hiring contract employees. One hurdle is the definition of a Contract Employee. A contract employee by definition is simply an employee that is bound to the employer by a contract drawn by both parties.

Advantages/Disadvantages for Contract Employees

There are advantages and disadvantages to hiring a contract employee. One advantage is the fact that employers are not required to withhold taxes from contract employees. This includes Federal, State and Social Security taxes. San Francisco, CA employers will also find it beneficial that they are not required to pay workman’s compensation or unemployment. Contract Employees are also not offered benefits. Employers won’t have to pay for the usual benefits such as paid sick leave, stock options vacations or health insurance. Employers do not have to offer anything extra for contract employees, which can add up to a significant savings for employers.

The Loyalty Factor

One of the possible disadvantages maybe the “loyalty” factor. Employers may feel the contract employee will leave whenever the price is right. Contract employees are not required to give notice unless it is spelled out in the contract. Retention may always be an issue. Employers may also be concerned by a perceived lack of control. A contract employee is really only required to deliver the product or service, so guidelines need to be drawn. HR guidelines are also less restrictive for contract employees.

Contract Employees Can Work From Anywhere

Sometimes a lack of work space can also be a factor in hiring a contract employee. San Francisco contract employees are not required to work on the company property. They may work from home or as a consultant from a firm in another office. This also saves the employer money from the bottom line. Although some companies might not even want to consider a contract employee others thrive on the use of contractors. The IT industry is one that has expanded by leaps and bounds by using contract employees. IT companies can use talented contractors from all over the world without the traditional costs. It’s just important to weigh the risks and advantages before hiring either a traditional employee or a contract employee.