This type of employment arrangement involves an individual working for a company on a temporary basis but being classified as an employee rather than an independent contractor. The worker receives a Form W-2 from the employer at the end of the year, just like regular full-time employees. For instance, a software developer hired by a firm to complete a specific project over six months, who receives a W-2 from that firm, operates under this type of arrangement.
Employing workers under this classification offers advantages to both the individual and the hiring organization. The individual gains access to certain employee benefits, such as workers’ compensation and unemployment insurance, while the organization ensures compliance with labor laws and avoids potential misclassification penalties associated with incorrectly classifying workers as independent contractors. Historically, this arrangement has grown in popularity as companies seek flexibility in staffing while adhering to increasingly stringent regulations.
