Contracting and Temporary Staffing: What Every Employer Needs to Know  

Contracting and Temporary Staffing: What Every Employer Needs to Know  

Finding suitable candidates quickly and efficiently can be challenging for many employers. From balancing economic fluctuations with the evolving market demands, there’s just so much to do within a limited timeframe. The need for agile staffing solutions has never been more crucial in lifting some administrative weights, leaving you with more time to focus on core business activities.

In this article, we discuss everything you need to know about contracting and temporary staffing, including how these staffing solutions can help you optimize your workforce, adapt to economic situations and thrive in a rapidly changing business environment.

The Difference Between Contracting and Temporary Staffing 

While contracting and temporary staffing are both methods of hiring workers temporarily, there are some differences between the two approaches.¹ Here’s an overview:

1. Nature of Engagement

Temporary staffing involves hiring individuals to work on a short-term basis within an organization. The temps are typically employed by a staffing agency and assigned to work at client companies. There’s also a chance that if the company likes the temporary staff, they might be offered a permanent position, usually referred to as temp-to-hire.

In contrast, contracting involves engaging individuals or companies on a contractual basis to perform specific tasks, projects, or services. Contractors work independently or as part of a specialized firm and are responsible for fulfilling their contractual obligations.

2. Scope of Work

In temporary staffing, the focus is on providing additional workforce to meet immediate staffing needs, cover absences, handle temporary increases in workload, address specific projects within the client company, or to assess whether employees will be a good fit before hiring them. Temporary staff members are integrated into the client’s existing workforce and perform tasks as directed by the client.

On the other hand, contracting emphasizes engaging individuals or companies with specialized skills or expertise for specific tasks or projects. Contractors often work on a project-by-project basis and are responsible for delivering specific outcomes or results as defined in the contract.

3. Employer-Employee Relationship

Contract workers are considered self-employed or independent entities, responsible for managing their taxes, insurance, and benefits. They work for the contracting company as external vendors and are generally not entitled to employee benefits.

Temporary staff members are considered employees of the staffing agency. The staffing agency takes care of administrative tasks such as payroll, taxes, and benefits for the temps. The organization that the temps work for generally pays a fee to the staffing agency for their services.

While temp workers receive compensation and have taxes deducted through W-2 forms, independent contractors are responsible for determining their tax obligations using 1099 forms.

4. Duration and Flexibility

Contracting engagements can vary in duration, ranging from short-term to long-term contracts, ranging from a few weeks to several years, depending on the scope and complexity of the project or task.

Temporary staffing assignments are typically shorter in duration and can last up to a few months, depending on the need of the company.

Why Hire a Temporary Employee or Contractor? 

Regardless of the size, contracting and temporary staffing can benefit your business by providing the following:

1. Flexibility

Contracting and temporary staffing offer businesses the flexibility to adjust their workforce size and composition based on changing demands and project requirements. Suppose you have temporary skill requirements that the existing workforce may not possess. Hiring an independent contractor or temp staff can help you quickly scale up or down without long-term commitments.

Instead of investing in training or hiring permanent employees for short-term needs, you can simply engage specialized contractors or temp workers who already possess the skills you require. This enables you to access expertise on-demand, complete specific projects efficiently, and avoid long-term commitments when specialized skills are no longer needed.

2. Cost-Effectiveness

Temporary employees can be a cost-effective solution for organizations. Instead of bearing the costs associated with hiring permanent employees, such as benefits, paid time off, and healthcare, organizations can save money by hiring temporary workers, as it’s the agencies that provide these benefits. Depending on the salary and compensation package offered by the company, benefits can add up to 30-50% of the total package.

3. Specialized Expertise

Independent contractors or temporary employees often possess specialized skills or expertise that may be required for specific projects or tasks. Hiring them allows organizations to access these skills without investing in extensive training or hiring full-time employees.

4. Faster Recruitment Process

Temporary staffing agencies can assist businesses in finding suitable candidates quickly. These agencies often have a pool of pre-screened and qualified professionals ready to work on short notice. By leveraging their networks and expertise, you can expedite recruitment and save time finding the right talent.

5. Reduced Administrative Burden

When hiring temporary or contract staff, businesses can delegate various administrative tasks, such as payroll, taxes, and benefits, to the staffing agency or the contracting individuals themselves. This helps streamline administrative processes and reduces the burden on internal HR and administrative teams.

6. Trial Period for Permanent Hires

Hiring temporary workers can serve as a trial period to assess their skills, work ethic, and cultural fit within the organization. It provides an opportunity to evaluate potential candidates before considering them for permanent roles, reducing the risk of a bad long-term hire.

7. Enhanced Productivity

By bringing in additional staff during peak periods or for specific projects, organizations can distribute workload effectively, prevent burnout among permanent employees, and maintain high levels of productivity.

8. Fill Workforce Gaps

Temporary employees can help fill workforce gaps during employee absences, maternity or medical leaves, or sudden departures. It ensures that business operations continue smoothly while the organization searches for permanent replacements.

9. Knowledge Diversity

Temporary employees or contractors bring a fresh perspective and diverse experiences from working with various organizations. This diversity can enhance problem-solving, creativity, and collaboration within the team, leading to improved outcomes.

10. Geographic Expansion

Temporary workers or contractors can be valuable when organizations expand to new locations or embrace remote work arrangements. They can assist in setting up operations in new areas or provide remote support without needing physical relocation.

How to Hire Temporary or Contract Employees 

Here’s a step-by-step guide to help you uncover the advantages that come with temporary staffing:

1. Identify Your Staffing Needs

Before embarking on the hiring process, clearly define your staffing requirements. Determine the specific skills, qualifications, and experience needed for the temporary position. By precisely outlining your needs, you can communicate them effectively to the staffing firm, ensuring they source candidates who closely match your requirements.

2. Research and Select a Reputable Staffing Firm

Look for agencies with a track record of success, positive client testimonials, and a deep understanding of your specific workforce needs. Choose a staffing firm with a strong network of candidates, comprehensive screening processes, and a commitment to delivering quality talent.

3. Engage in Consultation

Once you have selected a staffing firm, schedule a consultation to discuss your staffing needs in detail. This consultation serves as an opportunity to provide comprehensive information about the position, your company culture, and any specific requirements or preferences. A staffing firm can use this information to identify the most suitable candidates and streamline the hiring process.

4. Candidate Sourcing and Screening

One of the key benefits of engaging a staffing firm is its extensive candidate network and expertise in sourcing qualified professionals. The staffing firm will leverage its resources to find potential candidates, conduct comprehensive screenings, and can perform background and reference checks upon request. This dynamic process ensures that only the most qualified and reliable candidates are presented to your organization for consideration.

5. Candidate Selection and Placement

After the staffing firm has identified potential candidates, they will present a shortlist of individuals who meet your requirements. Review the resumes, interview the candidates, and assess their suitability for the temporary position.

The staffing firm can facilitate this process, coordinating interviews and providing valuable insights on the candidate’s qualifications and fit within your organization. Once you have selected, the staffing firm will handle the necessary paperwork and ensure a smooth onboarding process.


Peak Performers is here to help! As an organization committed to making a positive impact, we prioritize job opportunities for individuals with disabilities and chronic medical conditions.

We believe that disability should not hinder anyone from accessing employment. By actively recruiting individuals with disabilities, you can help foster a diverse and inclusive workforce and tap into a wider talent pool.

If you’re seeking contract, temporary-to-permanent, or direct hiring solutions, we provide these options to enhance your workforce and reinforce your commitment to diversity, equity, and inclusion (DE&I) initiatives. Contact us today  to learn more about how we can help.


1. Elliott, Jessica. “Temporary vs. Contract Employee: What’s the Difference?” US Chamber, 25 Jan. 2022, www.uschamber.com/temporary-vs-contract-employee.


From the blog

The latest industry news, interviews, technologies, and resources.
Is a college degree necessary for job success? Explore the truth about skills-based hiring and discover alternative paths to employment
Unlock cost-effective hiring solutions! Discover winning strategies to reduce hiring costs and find top talent without breaking the bank.