HR Management & Compliance

Advantages of W-2 Employees

In some recent posts, we’ve been talking about the classification of workers in organizations. In general, it’s pretty clear cut whether a worker is an employee or an independent contractor and the IRS explains some criteria for distinguishing between the two.

employee

Source: scyther5 / iStock / Getty Images


However, in some cases the line between the two is a bit fuzzy and companies can make arguments for either classification.
In our last post on this subject, we talked about some of the benefits of classifying workers as independent contractors. Here, we’ll look at some of the benefits of classifying them as employees, as outlined by Billie Anne Grigg in an article for Fundera.

Committed to Your Company

Contractors often get into independent contracting for the independence it provides. They probably don’t plan to stick around with you for too long, and even if they do, you’re likely not their only source of income. Traditional employees, if treated well, are often much more committed to their employer.

Offer More Continuity

Employees tend to know the ins and outs of your business better than contractors, and this can help with continuity. A long-term employee could move into a management position, for example, or take over for a colleague who leaves the company, even if the role is slightly different.

Free Up the Business Owner’s Time

“Being a small business owner requires you to wear dozens of hats, and sometimes you might feel like you can’t get a break,” says Griggs. “Having employees allows you to delegate specific tasks for the long term, so they’re off your plate for good.”

Less Need for Onboarding

Independent contractors generally have some great industry and subject matter expertise, but they aren’t typically going to know how your specific company operates very well. This means you need to onboard every time a new contractor comes in. This isn’t the case with employees who generally need to be trained just once.
So far, we’ve talked about the advantages of classifying employees as an independent contractor who is issued a 1099 and a traditional employee who is issued a W-2. We’ve also looked at some of the factors that weigh in favor of one classification or the other.
Confused yet? Well, there’s more. In a future post, we’ll talk about yet other alternatives to W-2 and 1099 employees.