Using Independent Contract Workers to Fulfill Government Contracts

Sep 12, 2011 by temineth

Using Independent Contract Workers to Fulfill Government Contracts

There are often real benefits to small businesses when they use independently-contracted workers instead of hiring traditional employees. But, there are some

Contract workers can be employed by either the government itself or through an independent contractor to fulfill a grant or contract. The benefit to you as a small business owner is that the work force you assemble is considered self-employed. As such, each worker is responsible for his/her own self-employment taxes and other expenses associated with their work.

Using independent contractors may work well for you as long as you understand that you need a written contract with each worker that defines his/her willingness to perform the conditions of the contract in exchange for predetermined compensation. The contract must also state that the independent contractors control their own work hours and pay their own expenses.

Knowing the difference between contract workers and employees can save you big bucks, but be sure you clearly define the work agreement in advance of the project you are staffing. There is a fine line between a worker being seen as an employee and a contract worker.

In general, an employee is entitled to all the benefits that the contractor/employer usually extends to their employees. According to the U.S. Department of Labor, government contractors must meet government criteria for wages and fringe benefits, must pay time and half for overtime and must provide safe and sanitary work conditions.

As a small business owner, you can cut your administrative costs significantly through the use of contract workers. You save on the insurance, retirement and social security costs associated with permanent employees and on accounting. It can make the difference between scoring a winning contract and being an “also ran” bidder.

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