What about Contractors?
- David Skipton
- Jul 29
- 2 min read
I had an interesting conversation with a fellow business owner the other day. I was explaining and demonstrating my platform to help business owners select the people they bring into their business when they made a remark I had heard before but never really inspected.
They could see the obvious benefit of having accurate information about an employee candidate before taking a chance on a person that might not work out. But then they said, "We don't hire W2 employees. All our people are 1099 contractors."
Many companies hire 1099 contractors for activities that used to go to W2 employees. Smaller businesses use this as a means of getting essential work done while lowering the financial and regulatory demands on the company that are associated with having their own W2 employees. Where contractors are used to provide non-customer-facing administrative or other types of work, it can be a good way to go. The moment those contractors are placed in roles where their activities interact with the business's customers or can affect that company's reputation, everything changes.
The primary reason is that clients, regulators, news agencies and the like do not see or care about the financial relationship between a company and who represents them. Whatever the arrangement that may be in place, it is the COMPANY'S NAME, BRAND AND REPUTATION that is on the line. Where a company has direct control of the work, skills and actions of their direct W2 hires, those controls lessen when it involves 1099 contractors. This opens them up to INCREASED RISKS.
When a contracted sales representative uses unethical means to manipulate a buyer into a contract between a vacation rental agency and a person. It is the Vacation Rental Company's reputation at stake, and THEY are the ones in trouble.
When an Optometrist farms out their patient scheduling or billing to an independent individual who delays the order or over bills their patients, causing frustration, upset and loss of that patient, that loss is directly felt by the Optometrist. It will be the Optometrist that suffers the complaints and lowered rating on YELP. Not the contractor.
The bottom line is that no matter the financial relationship a company has with its people. They would be wise to insist on putting anyone placed in a position possibly affecting their reputation through the same rigorous protocols. Their
livelihood and their company reputation depend on it.
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Best Regards,
Dave
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