What is Contractor Onboarding?
A contractor onboarding is a set of processes or activities that is aimed at seamlessly inducting contract employees or onboarding freelancers into a company. Activities include but aren’t limited to drafting a contract agreement, training, offering tools etc.
Importance of an Effective Independent Contractor Onboarding
Often an independent contractor onboarding or onboarding a freelancer isn’t well-planned in most companies. Since these workers are hired on an interim basis, companies tend to become complacent in onboarding them.
Several reasons contribute to a contractor’s displeasure in a company. One among them is an unengaging and incomplete onboarding process. We see that full-time employees are differently (and with extra vigor) assimilated into a company’s culture compared to an independent contractor.
Effective onboarding has several benefits. It bolsters employee engagement, performance, and retention. The perfect onboarding experience is shown to sway an employee’s inclination towards a company’s goals and values.
In particular, a good contractor onboarding yields the following benefits:
Saves time and money: In most companies, onboarding permanent hires is a carefully sculpted process. However, contractors are not endowed with this luxury. Consequently, this hurts both your coffers and the time on your clock.
An independent contractor onboarding helps you and the hiring manager guide them through introductory training and basic company processes. Planning ahead about how you will be providing access to the right tools, security, and communication channels significantly saves a lot of time.
Cultural Assimilation: It is likely that your independent contractor feels left out from your company’s profound mission and goals. A half-baked contractor onboarding puts them at the receiving end of several unanswered questions, low motivation, and unhappiness. An engaging onboarding will seamlessly assimilate an employee into your company.
Clear expectations: Independent contractors come with a specialized skill set. In fact, they are hired for this exact reason. Hence, you must define their roles well. Their responsibilities should be clearly communicated. Here is where onboarding helps. The cooling period gives you and your contractor ample time to set expectations right from the start.
There are also several other benefits of an onboarding process: employee engagement, employee retention and employee performance. Check out our guide on remote onboarding.
How to Onboard an Independent Contractor
A contractor onboarding process is different to onboarding a permanent employee. For instance, you do not owe them any employer contributions. Also, they are technically self-employed. Hence, in most cases, they manage tax requirements on their own.
Note the steps below to establish a strong contractor onboarding workflow.
CLEARLY DIFFERENTIATE BETWEEN A CONTRACTOR AND A PERMANENT HIRE
These questions will help you mark this distinction:
- Is the worker hired temporarily?
- Is the work given enough flexibility to choose when and where the work is carried out?
- Does your worker use his own set of tools to carry out the work?
- Does a worker raise an invoice to your company?
If the answer is yes, then your employee is a contractor.
CREATE A CLEAR AND CONCISE JOB DESCRIPTION
One of the first steps of your contracting onboarding process is to create a job description that establishes your contractor’s day to day responsibilities. The job description should also reveal the work hours, location, etc.
DRAFT AN AGREEMENT
Another discriminator in the contractor onboarding process is the paperwork.
You have to create a contractor agreement different from what you would draft for a permanent hire. The agreement must clearly establish the relationship between your company and the contractor.
Ideally, the document should contain:
- Scope of work
- Work hours
- Tracking tools your contractor or freelancer should use
- Access to various sections of the building your contractor should work from
- KPIs and benchmarks
- NDA and other confidentiality agreements
- Ownership rights
- Payment and billing terms
- Invoicing terms
- Termination details
- Notice periods
Apart from your company’s agreement, there are two other independent contractor forms required from your contractor.
Namely, they are Form W-9 and Form 1099.
Form W-9 acquires such as name, address, and the Taxpayer Identification Number from your contractor or freelancer.
Form 1099 reports how much you have paid to your freelancer. This form is required when you are subject to the following conditions:
- When you have paid more than $600 in a year to your contractor through methods other than payment platforms or a credit card.
- Your contractor did not check a box indicating that they are running an S corp or C corp.
Here is where a contractor onboarding software such as Multiplier can help. Generating contracts for your employee is hassle-free with Multiplier. With local entities and legal partners in over 50+ countries, we know the ins and outs of developing contracts that comply with local compliance and labor laws.
In a BambooHr survey, ¾ employees felt they needed dedicated training sessions during their onboarding.
Although permanent employees enjoy highly interactive and collaborative training sessions, the contractors and freelancers are often left out in the cold.
Surprisingly, many companies don’t even have a structured training program for contractors to familiarize themselves with their work. As a result, contractors face several job risks and compliance expectations.
Even a seasoned worker needs on-the-job training to understand the context of your business. Under such circumstances, you must create training schedules and customized training programs for your contractor.
However, you needn’t walk them through every detail. Offer orientation material to learn safety issues, workplace behavior, worksite policies, and procedures. This saves tons of time. Moreover, your contractor too can get a whiff of your health and safety first culture.
ACCESS TO TOOLS AND PROCESS DOCUMENTS
To begin with, audit all infrastructural requirements of your permanent employees. Upon completion, make a list of all the access and tools your contractor will need to carry out their tasks.
For a contractor, it is extremely frustrating to not have access to tools. What is more frustrating is going on a wild goose chase to find the right person and the right place to get access to these tools.
This is why you need process documents. These are documents that go by many names such as wikis, knowledge bases, etc. They can solve tasks as trivial as locating whom to call in case of a forgotten password or something more duty-oriented such as using your content management system, etc.
Put these documents in a shared folder or a shared intranet site. This will ensure your contractor will seamlessly work and calmly deal with job-related issues without requiring much help.
Contractor Onboarding Checklist
An independent contractor is hired to fire right off the bat. Unlike a permanent employee, a contractor has no cooling period where they get opportunities to learn more about the workflow and the processes. Thus, when onboarding your contractor, you should be extra prepared.
Here is a contractor onboarding checklist that can come in handy:
Paperwork: Laws, compliance, regulation are consolidated on paper. Make sure your independent contractor has clear concise information on all the forms they need to sign. Ideally, your paperwork should include:
- Tax documents like W-9’s or W-8
- Confidentiality agreements such as NDA, etc.
- Contract agreement that stipulates a period of employment, work hours etc.
Access to tools of the trade: Another roadblock that can hit any new hire is access to the right creation, management, and collaborative tools.
A permanent employee may have the luxury of waiting a couple of weeks before diving nose deep into the work pile. However, an independent contractor is padded up and ready.
In the latter’s case, your inability to provide access to the required tools can put a damper on the spirits of your independent contractor. This dismay can be caused by anything such as:
- Kept locked from a part of the building
- Locked from the knowledge base
- No access to the website’s backend
To correct this, start documenting the entire process of onboarding a new hire. Audit their experience and keep improving all touchpoints and interactions they’ll engage with during their onboarding.
Create a contractor handbook: Create a guide that independent contractors can use in the event of a problem. The handbook must contain who the employee should contact when different needs arise, how to login into the system, best communication channels, company processes, building access information, etc.
First day formalities: Once you make sure your contractor has all the tools and information to get started, prep them up with refresher and training sessions.
Effective onboarding is not all about the paperwork. It should include conducting training and refresher sessions as well. A quick refresher on the roles and responsibilities for the new hire would communicate expectations, deliverables, deadlines, collaboration channels, etc.
Contractors would love some training before they begin their role. For instance, you could offer tutorials on software, development platforms, communication tools, management software etc.
Prompt check-ins: Making your independent contractor feel included is important in improving employee engagement and performance. As a part of a contractor’s onboarding, make sure you schedule calls with them. Over the call, you could check the status of the project, expected deadlines, etc.
Ask feedback: HR managers gather onboarding feedback from permanent employees. However, contract employees are left out from this roundup. With evidence mounting for onboarding positively impacting employee performance, it is important to fine-tune this experience.
Contractor Onboarding Best Practices
CREATE A STRUCTURED CONTRACTOR ONBOARDING
A mundane mistake companies make when hiring contractors is not having a structured onboarding process. An unplanned onboarding leads to an ambiguous and incomplete process.
A structured contractor onboarding process helps your contractor be at the right place with the right tools at the right time. Graduates of a structured onboarding process are up to speed with the company’s culture, safety regulations, etiquette, and roles and responsibilities right from the first day.
As stated above, paperwork is one of the most important aspects of onboarding a new employee. Particularly for contractors, there are a few additional but important clauses that have to be properly understood by both sides before the advent of the project.
Here is what your agreement should contain:
- All business-related information (e.g. business name, address, phone, email, fax etc.)
- The business’ confidentiality and intellectual property agreement
- Non-disclosure agreements
- Policies pertaining to work hours, payment dates, the scope of work, etc.
EVIDENCE OF QUALIFICATIONS & REFERENCES
One thing about hiring is that you can never be too careful. Cultivate a thorough vetting process to check your contractor’s background, academic credentials, professional credentials, references, etc.
Background checks can protect both you and your contractor from various risks. The scope of your background checks will vary based on the project.
References can add more credibility to your background checks and your contractor’s academic credentials. Get more than one reference so that you may not be duped into believing a fake reference. Doing your research and touching base with 5-10 references will ensure you are getting a qualified and trusted contractor.
DON’T OVERLOAD YOUR CONTRACTOR WITH INFORMATION
While getting your contractor up to speed with the project is expected, be aware of not overloading your contractor with information. Many companies stuff new hires with information on the first day. This refrains the contractor from processing the information.
Instead of overwhelming them, keep it simple. Give them the information they need to know right away. An onboarding software like Multiplier would help here. Your contractor can refer to contracts, their insurance benefits, and payroll management as well.
How Multiplier Can Be Your Contractor Onboarding Software
Hiring and onboarding a freelancer or a contract employee can take a good load of your time. Particularly, creating a contract that clearly demarcates a contract and a permanent employee involves a lot of technical jargon and legal obligations.
Simply put, there are a lot of risks involved.
A good contractor onboarding software will ease your life. It can help you create compliant contracts, manage payrolls and invoices, and disburse salaries in a few clicks.
Trusted by several big and small companies from around the globe, Multiplier’s SaaS-based platform spawns contractor agreements in seconds. Take advantage of Multiplier’s presence in over 50 countries and hire and onboard any talent from around the world. Our legal partners are our watchdogs and are on the lookout for changes in compliance and labor laws 24/7.
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