Different types of workers: Employees, contractors and more

When hiring a workforce, it’s important for business owners to understand the options they have in regard to different types of workers. While the majority of businesses won’t employ every type of worker, knowing their options allows business owners to select the legally appropriate choice while remaining cost-efficient. While not 100% complete, the list below includes descriptions for the most popular types of hired help.

Employees

An employee is a worker hired by a company to perform specific duties in exchange for a fee, typically in the form of hourly or monthly wages. Companies commonly use Employment Agreements to outline job descriptions, compensation and other details.

Full-time employees

Full-time employees work a minimum amount of hours specified by their employer. There is no official definition of full-time employment, but in the United States, full-time employees generally work at least 36 hours a week. They can be salaried employees, meaning they earn a fixed amount per month, or paid hourly.

Full-timers are more likely to be granted benefits (such as healthcare, paid time off, etc.) not afforded to other worker classes. For some businesses, providing these benefits to employees may be legally required.

Part-time employees

Part-time employees typically work fewer than 36 hours a week and often have a more flexible schedule. Although they may work 40-hour weeks, seasonal employees that only work portions of the year are considered part-timers. Part-time workers are generally not entitled to employee benefits.

Temporary employees

Temps are employed only for a specified period of time. They may work part-time or full-time hours, but they generally are not eligible to receive employee benefits. Many are hired through temporary employment agencies, and some are hired as “temp to permanent,” which allows for permanent hire after a probationary period.

At-will employees

The majority of American workers are at-will employees. At-will employees can work part-time or full-time hours, but they can be dismissed for any reason and without warning (except in Montana). Likewise, at-will employees have the right to quit or strike at their convenience without notice.

Leased employees

Leased employees are employed by professional employer organizations (PEOs) and are offered to outside companies to perform HR work. Lease terms can be relatively short or may last more than a year. Management of leased employees is the job of the company, while payroll, taxes and other fees are obligations handled by the PEO.

Job-share employees

Job-share employees are two or more employees who share one full-time job. They typically split 40-hour work weeks and enjoy employee benefits prorated by share.

Independent contractors provide goods or services to a company under terms specified in a contract or a verbal agreement, such as and Independent Contractor Agreement. They can be individual persons, companies orcorporations. They generally lack control over their schedule and are expected to work as and when needed.Unlike employees, they do not have income taxes withheld from their pay; instead, they are required to file an IRS Form 1099-MISCat the end of the year to report their earnings. They are typically required to fund their own benefits and furnish all their supplies, which can then be used as tax deductions. Because of these tax restrictions, businesses must be careful when classifying workers as contractors or employees, as misclassification can lead to steep IRS fines. To avoid fines and penalties, see our W-2 vs. 1099 Wizard to make sure your business’ workers are classified and reported correctly. For help with taxes when hiring contractors, see our guide to filing 1099s.

Freelancers

Freelance workers are typically individuals hired as independent contractors to perform a specific duty.

Subcontractors

• Subcontractors are, in most cases, companies or individuals contracted to perform part or all of another person or company’s contractual duties.

Tenure

Generally speaking, tenure is the length of time an employee has spent with a specific company. In academia, however, a tenured professor or teacher is a senior academic with a contractual right not to have his/her position terminated without just cause. Highly qualified educators are initially placed on “tenure track,” which guarantees consideration for eventual tenure.

Tenure was partially developed to foster a sense of security for innovative professors, giving them academic freedom to speak out against a university or public opinion for the sake of controversial findings or research.

Apprentices

Typically, apprenticeships are training periods for skilled tradesmen. Apprentices work under the guidance of journeymen and masters who teach skills necessary to gain licenses for independent working. Upon completion, apprentices become journeymen and eventually master tradesmen.

Interns

Similar to apprentices,interns work under the guidance of higher-level employees. Interns, however, are trained for white-collar and professional careers. They are typically college students, but interns can also be high school students or post-graduates.

Interns can work part-time or full-time hours and generally have a specified period of employment that can last a few weeks to upwards of a year. They can be paid (either hourly or as a stipend) or unpaid, which typically includes an offer for university credits. Those considering hiring an unpaid intern should consult the FLSA regulations regarding internships to protect themselves from legal issues.

You have a number of choices when trying to build a team. And while some may be less expensive or require less management than others, the most important factor when hiring is finding a person who fits your culture and taking the necessary steps to protect your business in the process.