22 Freelance Workforce Terms: A Simple Glossary

4 min read
Sam Nedimyer
Sam Nedimyer, Manager, Digital Content
October 16, 2018
22 Freelance Workforce Terms: A Simple Glossary
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The meteoric rise of the freelance economy has shined a spotlight on the fastest-growing segment of the labor market: temporary, independent and contingent workers.

The term “contingent workforce” encompasses all workers who fall outside the traditional ‘W-2 employee’ scope (full & part-time employees) or whose employment is contingent on external conditions. In short, these are not your classic employees. They’re not full time, not working 40 hour weeks and not eligible for benefits.

The below glossary is intended to help managers new to the world of contingent work navigate different worker classifications, better understand industry terminology and standardize verbiage across the industry. And the less time you have looking up terms, the more time you'll have being efficient with your day-to-day workflows.

1099 Worker - See “independent contractor.”

Assignment - A task or duty being performed by a contingent worker.

Consultant - This type of worker is usually considered contingent. They are typically knowledge-based and part of a consulting firm or similar organization.

Contingent Worker - Used to describe work arrangements that differ from regular/permanent, direct wage and salaried employment. Contingent workers are primarily distinguished by having a clearly defined or limited tenure. Contingent workers include temporary employees provided by an outside staffing firm and independent contractors/consultants. Contingent work also includes statement of work (SOW) consultants who work for the company on a short term basis.

Contingent Workforce Program - Used to describe the way a company organizes its need for and use of contingent workers. This may be limited to staffing, but usually includes other efforts to optimize cost, quality, efficiency and mitigate risk.

Contractor - See “independent contractor.”

Employee - An individual who works directly for an organization in a job with no specific end date. Employees are mostly full-time engagements, but can be part-time as well. The term employee is generally accepted as one who receives a W-2.

Freelancer - This type of worker is self-employed and not committed to a particular employer long-term. These types of workers usually perform specific, project-based assignments for a variety of different organizations.

Freelance Management System (FMS) - An FMS is a cloud-based workforce solution that helps businesses manage their freelancers and 1099 workers all from one centralized technology platform.

Human Capital Management (HCM) - A category of the Human Resources industry; sometimes referred to the software used by businesses to manage and procure W-2 employees.

Independent Contractor (a.k.a. Independent Worker) - A self-employed individual performing services for a company under contract rather than as an employee. Also referred to as freelancers, consultants, and, in the United States, “1099s,” which is the designation of the IRS form that companies use to report the money paid to independent contractors.

Managed Service Provider (MSP) - A company that is responsible for managing a client's temporary and contingent workforce program. MSPs manage the recruiting process by providing candidates from their own talent pools but also by providing candidates from other agencies.

Non-Employee - An individual who provides services/skills to an organization but is not providing those services/skills on a permanent basis. Example of non-employees can be temporary workers, independent contractors, consultants, outsourcing provider staff, SOW workers, etc.

Outsourced Workers - These employees are paid and managed by a third-party that bills the organization, which in a sense hires the third-party directly and the employees indirectly.

Part-Time Employee - These workers may or may not receive benefits, but fall outside the traditional ‘employee’ category due to the number of hours they work per week. This type of worker is not considered contingent because they’re still inside a company’s ‘four walls.’

Recruiting Processing Outsourcer (RPO) - External service provider that assumes all or part of its recruitment processes for a company. Includes resume screening, job board searching, job posting.

Risk Management - The broad category of activities used to minimize, monitor and control the likelihood and impact of event losses. Risks in the context of contingent labor may include legal risks pertaining to co-employment, worker classification and resource risk.

Rogue Spend - This term represents expenditures with staffing suppliers outside of pre-negotiated contracts or the guidelines of the organization’s contingent workforce program.

SOW - Any consultant performing work on a project under a Statement of Work (SOW) arrangement. In contrast to agency consultants, SOW consultants are typically, but not always given a regular, consistent salary by their employer and continue to receive this salary when off project assignments (i.e. “benched resource”).

Temporary Employees (a.k.a. “Temp”) - This type of worker is typically hired through an outside agency or staffing firm. They are expected to leave their employer within a certain period of time. These employees are sometimes called “contractual,” “seasonal,” “interim” or “temps.”

Vendor Management System (VMS) - A VMS is a software platform that businesses use to manage and procure staffing services – temporary, and, in some cases, permanent placement services – as well as outside contract or contingent labor.

W-2 Employee - Workers who are paid hourly on a regular basis and work with a staffing firm that handles their payroll.