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Replacing Employees with Contract Labor

An employer is provided the benefits of an employee's labor and often compensates them far below the monetary value they bring to the organization. The trade-off for that is the employer is responsible for the safety, welfare and protection of the employee. If an employer does not want those responsibilities they can utilize contract labor which is free from harassment, workers compensation and most other legal protections. On the other hand, the employer has much less control over the person. Do you think that employers will eventually stop hiring employees because of the costs and responsibilities and instead just hire contract labor?

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Many larger employers have started hiring independent contractors, which is the same as contract labor. As a company hires additional employees, there are many expenses. Besides paying the worker's hourly rate or salary, the employer must pay federal and state unemployment taxes, FICA taxes (the employer match portion), ...

Solution Summary

This solution discusses the advantages and disadvantages of replacing employees with contract labor.