The American workforce looks much different than it did 20 years ago and the gig economy is growing. Technology has made it easy to find and complete short-term assignments, which has led to a rise in the independent workforce, or “contract” workers. The term for this workforce is called the “gig economy.”


While this option presents many benefits for a small business owner in the areas of budgeting and flexibility, the option of hiring contractors over employees can lead to increased risk for your business. Take a moment to learn more about the differences between employees and contractors HERE.


Typically, contractors are self-employed and opt to work whatever schedule is mutually agreeable to them and the businesses that require their services. Hiring a contractor can be an excellent choice for a small business owner, as it allows for great flexibility and contractors can be potentially much less expensive for specific types of projects, such as seasonal work or work that is not within a company’s general ability, but necessary for operations, such as accounting or cleaning.



While there are many benefits to hiring contractors to fill these roles, there are drawbacks as well. It is important to review the legal risks of hiring an attorney that has experience with small businesses, such as the lawyers at LexLaunch.Com. Here are a few critical reasons you need to consult with an attorney before hiring in a gig economy:


  1. As we’ve said before on the blog, good contracts make better partnerships. This is true whether the partnership is with an employee or a contractor. Each hired professional needs an individual contract that is specifically designed to deal with their particular role in the operations of your business. The wording of this contract is critical in protecting your business from risk if there are discrepancies between you and the hired professional at a later date.
  2. Arbitration Clauses. It is important to consider including a clearly stated arbitration clause in each individual contract you create for your hired professionals. When written by an attorney with experience in small business legal issues, it can provide additional risk management when questions regarding employment functions arise. If you implement an arbitration clause into your hiring contracts, you have the right to negotiate with your contract employees in private before taking an issue to court, and can save your business time and money should this type of activity arise.
  3. Confidentiality Agreements. Contractors are typically hired for specific purposes. And, unlike most employees, contractors might be working for many companies similar to yours at the same time they are working for you. A contractor could very well be working for your competition and could possibly share confidential information that might hurt your business. If there might be an opportunity, even accidentally, for a contractor to share your secrets, you need to establish your requirements for confidentiality in writing to reduce this risk. To ensure you are protected, it is important to have this agreement written and reviewed by an experienced attorney. Learn more about the value of non-competition agreements HERE.


The gig economy is here to stay, at least for the time being. That can be great for small business in terms of flexibility and financial bottom line. However, because each “gig” is different in terms of operations, business needs and sourcing, there isn’t a one-size-fits-all solution when it comes to agreements between a business owner and a contractor. It is important to meet with an attorney that has experience specifically in the area of small business management to implement safeguards from the first day on the job.


With careful planning with an experienced attorney, you can take advantage of opportunities as they arise. You can also ensure that you are personally and professionally protected from risk as your business grows. Don’t wait to review your business structure, call the professionals at today at (816) 434-6610 or click here for more information.