April 29, 2024
There are 3 things we love talking about around here:
If you’ve been following along with our newsletter or recent podcast episodes, you know we’ve been going hard on #1 lately. It may be starting to feel like we’re pushing employees on your business.
But we promise, we’re not! In fact, if you listened to this episode, you may have caught me saying that a blended team of independent contractors and employees is actually a super profitable way to run your business.
IF (and a big it’s a BIG if) you’re doing it right.
If you walk away from this post with nothing else, let it be this:
You cannot treat a 1099 independent contractor the same way you treat a W2 employee.
Managing them the same way is basically like swinging a wrecking ball straight through your culture and your compliance.
It opens up a gaping hole for legal issues, blurred boundaries, resentment, and confusion to crawl in with their grubby little paws and wreak havoc on what you’ve worked so hard to build.
So, let’s talk about what to do and what NOT to do when you’re working with a blended team. We’re here to do way more than just keep you on the right side of the law. We want to help you get the most out of your team’s performance and make sure everyone’s bringing their A-game.
But first….
Independent contractor vs. employee: what’s the diff?
Before we go further, stop everything else and repeat after me.
“As a business owner, it is my legal and ethical responsibility to correctly classify independent contractors and employees.”
Empowering, huh? Hell yeah! I am business owner, hear me roar!
Absolutely terrifying? Also yeah!
Don’t panic. I mean, yes, the ultimate responsibility of correct classification is on you. That can feel heavy.
But you’re not up HR-creek without a paddle. We’re here to help with the whole “wtf is the difference?” question so you can make sure you’re getting it right.
When it comes to talking about the two classifications, we’re on the verge of beating a dead horse. We’ve put out a lot of info and resources about this topic. Remember what I said at the top of this post? Classification compliance is one of our three favorite topics to talk about, and we’ve been doing a lot of talking lately.
So rather than dig in to that in this post, here’s a little round-up in case you need to get caught up:
- Everything you need to know about the Department of Labor’s Final Ruling on contractor classification is here in this blog post.
- If you prefer listening over reading, here’s a podcast episode about the who, what, when, where, and why of the new law on contractor classification.
- We did a two-part deep dive podcast series all about the classification factors that determine what type of worker you need for your business. We talked about the first 3 factors here and the remaining 3 factors here.
- If you already know you have a misclassified worker who needs a new classification, this episode is all about how to navigate that conversation and that transition.
- Looking for a more dynamic, story-driven learning experience? Join me inside this 90-minute workshop to get the answers you need to make effective team building decisions!
Ok, so from here on out we’re going to assume two things:
#1. You’re solid on the difference between the independent contractors and employees
#2: You have a compliant team made up of workers under both classifications
Capiche?
Ok, so now that we’re on the same page, let’s talk about DOs and DONT’s for leading this killer team of yours fairly and accurately.
DOs For Managing Independent Contractors and Employees On The Same Team:
Be The Client:
Remember, you’re the client to your independent contractor, not their boss. So take a step back and let them lean into their true expertise. Give yourself permission to be taken care of by your contractors and enjoy the client experience. Doesn’t that sound refreshing after all the management shenanigans you deal with every day?!
Be Transparent:
This one’s super important and often overlooked. When employees see you interacting with a contractor, make sure they understand there is a difference in the relationship. Otherwise, they may wonder why the other person is being treated differently (let’s say around alternative work schedules or feedback, for example) and resentment could start to build. That’s doom to your culture.
Get Clear On Expectations:
Everyone on your team, no matter their classification, should be crystal clear on what’s expected of them. For your employees, the job descriptions are your north star for expectations. But as you know, contractors don’t have job descriptions. Why? Say it with me:
Because job descriptions are a method of control, and you do not have control over independent contractors!
But job description or not, you and your independent contractor should both set and understand expectations, without you micromanaging how they complete their tasks.
^ Biiiig, bold highlight on that last point. I know this is the “Do” section, but micromanaging your contractors is a major “Don’t”!!
Use Contracts:
Ok no job descriptions for contractors, got it. So how do you get clear on expectations with the workers who aren’t on payroll? Written contracts! And who provides them? The contractors!
LIke I said in point #1, you’re a client of your contractor. Clients should never produce the contract. Imagine hiring an accountant to do your taxes. You wouldn’t draft up the contract detailing their services, deadlines, and fees, right? No way!
It’s the accountant who comes prepared with a service agreement that outlines what they’ll do, when they’ll do it, and what they charge. That’s their job. They set the terms based on their expertise and standard practices. Just like that accountant, your contractors should provide the contracts that frame the specifics of what they’ll deliver, protecting both parties and setting clear expectations from the get-go.
That said, if something’s not included in the contract they provide, be afraid to go back and ask them to add more details.
Respect Flexibility:
Most contractors choose this path for the freedom it offers them to set their own schedules and work methods. Embrace this advantage! Celebrate the flexibility your contractors bring to the table by trusting them to manage their time and methods.
As long as their deliverables meet your standards and deadlines as outlined in the contract, you’ll be leveraging their independence to your mutual benefit.
DON’Ts For Managing Independent Contractors and Employees On The Same Team:
Don’t Overstep Boundaries:
Who doesn’t love a good boundary?? Boundaries for your employees might vary depending on your company’s vibe and the rules you play by. But for contractors, boundaries are pretty straightforward.
Basically, you can’t mix them up with employees. No sharing employee perks, setting their hours, or roping them into company policies. Doing any of that is a quick ticket to some serious legal headaches with misclassification issues.
Don’t Neglect Employee Development:
Independent contractors are hired for their specific skills that fill in gaps in your team’s capabilities. They are responsible for managing not just their own projects, but also their own professional growth and development. But employees, on the other hand, rely on your leadership for professional development and career advancement.
Don’t overlook providing training, career development opportunities, and feedback to employees. These things make a huge difference for their engagement and retention, and underscore your values as a leader.
Don’t Offer Employee Benefits To Contractors:
It may seem harmless to offer contractors perks like PTO, especially if your contract spans a long duration or over a holiday. But it blurs the lines of their classification. Remember, they control every aspect of their work, including when they work.
Don’t Commingle Team Meetings:
As a general rule of thumb, contractors shouldn’t be at your regular team meetings for several reasons. And they all happen to start with C, isn’t that cute?!
- Control: Requiring contractors to attend regular team meetings could be interpreted as exerting control over how they perform their tasks. By now we all know that control over contractors is a big no-no, right?
- Culture: Contractors might have different objectives, responsibilities, and motivations than your employees. Including them in regular employee meetings might not be relevant to their roles and could create confusion regarding expectations and priorities.
- Confidentiality: Team meetings often involve discussion of sensitive company information or strategic plans which might not be appropriate to share with contractors who may also work with competing businesses.
Don’t Assume One Size Fits All:
Avoid using the same playbook for motivating your employees as you do with contractors. Your employees crave more stability, clear feedback, and recognition here and there. So, make sure to tweak your management strategy to hit those marks. Remember, your employees are in it for the long haul, not just a quick project like the contractors. Make sure your leadership approach reflects that difference.
Cheers to your leadership journey!
Managing a team of independent contractors and employees is no small feat, and here you are, doing it like a pro. By diving into this post, you’ve shown you’re serious about leading with intention and doing things right.
Seriously, building a business that requires this kind of diverse workforce is something to celebrate. You’re navigating the complex terrain of compliance while fostering a culture that’s as dynamic as it is diverse.
Remember, the key takeaway here is about respecting and leveraging the distinct roles each team member plays.
So, here’s to you, the savvy business leader making it all work. Keep leading the charge, and keep tuning in for more tips to keep your business buzzing and your team thriving. You’ve got this! 👏
There’s more where this came from!
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