In the midst of the Great Resignation, with employees quitting their jobs in record numbers, many workers are leaving their full-time jobs to pursue careers as freelancers or independent contractors — and that includes HR professionals. But if you’ve never been an independent contractor, there are a lot of unknowns: Where do you start? How is being a contractor different from being a full-time employee? And what do you need to know to succeed as an independent contractor?
If you’re thinking about transitioning out of your full-time Human Resources job and into independent contracting — or you’ve recently taken the leap — here are five things you need to know to set yourself up for success.
What You Need to Know About Being a Human Resources Independent Contractor
1. There are a variety of ways to be an HR independent contractor.
Being an independent contractor in the HR space isn’t a one-size-fits-all situation. There are a variety of ways to be an HR independent contractor, and if you’re thinking about becoming one, it’s important to understand all the options available to you.
One popular independent contracting framework for HR professionals is freelancing. Freelancers typically take on short-term assignments, usually by the project or by the hour, explained Greg Wilgenbusch, who both works as an HR independent contractor through the Human Resources consultancy he runs, Human Capital Mentors, and places HR professionals in contract, short-term, and full-time positions through talent firm Patina Solutions.
Generally, freelancers work with a variety of clients on different projects at the same time. For instance, as an HR freelancer, you might work with a company on a one-off project to create an onboarding checklist for new employees, while simultaneously working with another company to overhaul their talent sourcing policies and procedures.
Freelancers may also work on retainer, meaning they allocate a set number of hours per week or month to each client, said Mikaela Kiner, founder of HR consulting firm Reverb. In this scenario, you might be on retainer for four clients, each for 10 hours per week, which would have you working 40 hours per week across those four clients.
Another work opportunity for HR independent contractors is filling open positions within a company, but on a temporary basis. Wilgenbusch said that some HR independent contractors elect to take on interim assignments, in which they backfill an open position until the role is permanently filled by a full-time employee. These interim assignments can also include covering for full-time HR employees that are on leave (for example, when a full-time employee goes on maternity, paternity, or parental leave, or needs to take time off to recover from a serious illness.)
These types of assignments are more long-term, and Kiner said they can last several months. When filling a temporary or interim role, instead of working with a variety of clients, you’d be dedicated to that one role and company until the end of your contract.
There are many different ways to be a successful independent contractor in the Human Resources field, and by understanding the various types of opportunities available, you can choose the independent contracting structure that best suits your preferences and needs.
2. There are many pros of being an HR independent contractor…
There’s a reason so many HR professionals are making the leap from full-time roles to contracting; as far as a work situation goes, independent contracting has a lot to offer — starting with flexibility.
Kiner noted that contracting offers a high degree of flexibility, allowing you to choose to work full- or part-time, and have the ability to take off a month — or even a summer — if you’d like. Another benefit that could be very compelling to many: “You can turn down work if you don’t like the project or the rates,” she said.
Being an independent contractor also exposes HR professionals to a diverse set of opportunities — ones they likely wouldn’t get if they were tied to a single job and company. “Many of the contractors I work with are energized by the opportunities of working with multiple clients across multiple industries — meaning exposure to a variety of organizations, individuals, work cultures, and assignments,” Wilgenbusch said.
Finally, moving into a role as an HR independent contractor allows you to focus on specifically the type of work you’d like to do. Instead of spreading yourself across a variety of HR disciplines (like recruiting, DE&I, and benefits), which can be common in many full-time Human Resources positions, moving into an HR independent contractor role allows you to “focus on the area [or areas] of HR where [you] have the most passion and expertise,” said Wilgenbusch.
3. …but there can also be drawbacks.
There are a lot of pros to being an independent contractor — but there can also be significant drawbacks. Before you decide to move forward with a career as an HR independent contractor, it’s crucial to understand what the potential downsides could be.
The first potential drawback is stability. “Volume of work can be unpredictable, especially in the beginning,” cautioned Kiner. “It may be less than you’d hoped for, or more episodic.”
Kiner noted that full-time roles tend to have more consistent, regular, and predictable hours. “If you're someone who worries about job security or you need a guaranteed 40 hours a week, you might be more comfortable in a full-time role,” she said.
Being an independent contractor may also cut you off from certain opportunities within an organization. “Full-time work comes with career growth opportunities, unique projects, and stretch assignments that may not be available to you as a contractor,” Kiner cautioned.
Another potential drawback of being an independent contractor is that it requires you to seek out, find, and secure clients, said Wilgenbusch. And until you’re very established as a well-known expert in your field, or have regular, ongoing clients, the pursuit of new work might be constant.
“It’s very important for those new in the space to have the energy and ability to network, market themselves, and sell their skills and services to prospects,” said Wilgenbusch. If business development isn’t a skill you have (or that you’re willing to develop), it’s going to be hard — if not impossible — to succeed as an independent contractor.
Finally, because independent contractors often work on short-term projects, you may not be around to see how your contributions actually impact the organization. For many people in HR, this is an important element of their work. “Often, the full results of your efforts are not realized until after you have completed the project and are no longer working for the client,” Wilgenbusch said.
Like any position, the role of HR independent contractor has its benefits and drawbacks. It’s essential to evaluate the pros and cons to determine whether being an independent contractor is the best path for you and your career.
4. The way you get paid as a contractor is very different from how you’re compensated as a full-time employee.
Another major difference between being a full-time employee and an independent contractor that you need to know is that the way you’ll be compensated is not the same.
First, how — and how often — you get paid is completely different. Wilgenbusch noted that as a full-time employee, you receive regular paychecks in similar, predictable amounts. For example, when you’re on staff you get paid every pay period (biweekly, for instance), and your paycheck is the same amount every time it hits your bank account.
But as a contractor, getting paid doesn’t operate that way — and unfortunately, the process isn’t always so smooth. Because you’re working on different projects at different times, Wilgenbusch noted that your income will likely fluctuate. Plus, Kiner pointed out, instead of automatically getting a steady paycheck every pay period like you would as a full-time employee, when you’re a contractor it’s your responsibility to invoice your clients if you want to get paid.
Once you send that invoice, it could be a while before you’re actually paid. Kiner noted that payment depends on when you’re permitted to invoice and what kind of payment terms you set. For instance, if your invoice terms are net 30, and you can’t invoice until the project is complete, your client has 30 days from when they receive your invoice to to pay you — which means 30 days until you’re paid for the work you’ve already completed.
And Kiner pointed out that as a contractor, you won’t get the benefits, paid time off (PTO), 401(k), and stock options that you’d receive as a full-time employee. “Take this into account when you set your rates,” she advised.
For example, say you’re leaving a full-time Human Resources job with the salary equivalent of an hourly rate of $50 per hour, but your full-time position comes with two weeks paid vacation and covered medical insurance. As an independent contractor, you won’t get any PTO and you’ll have to pay for your medical insurance out of pocket. So you’ll need to take those extra expenses into account and charge clients more than $50 per hour to stay at your current income level.
HR independent contractors also have to pay their own taxes. So if you’re planning to transition to contract work, it’s important to talk to an accountant to figure out how much to set aside for taxes.
5. You need to be prepared to start slow and continually build your business.
If you’ve weighed the pros and cons and decided that becoming an HR independent contractor is the best next step in your career, there are still a few things you need to consider before you embark on this path. Here are four expert tips to help you succeed in making the leap:
- Test the waters. Before leaving your job to become an independent contractor, Wilgenbusch advised trying to do a few freelance or contract projects while you’re still working full-time if you’re able to. (Note that this could pose a conflict of interest with your full-time employer, so make sure to do your due diligence before taking on any side projects to ensure that this doesn’t go against your company’s policies.) By doing contract work on a somewhat trial basis while holding down a full-time job, Wilgenbusch said you can get a sense of the opportunities that are available and the expectations and demands they come with. Gaining this information and knowledge before fully committing to the freelance lifestyle will enable you to make a more informed decision on whether or not this is the right career path for you.
- Prepare for a slow start. In a perfect world, you’d have plenty of HR work as an independent contractor from the get-go. But in reality, most people need time to get their business up and running. So it’s essential to do everything you can to prepare and give yourself that time. Kiner advised preparing yourself for a slow start, both mentally and financially. “It may not happen, but it’s better to be ready,” she said. “If you’re prepared, you won’t feel anxious during the first few months while your business is ramping up.”
- Always be networking. As an independent contractor, you’re often responsible for creating your own opportunities — and that means constantly and consistently building your network. “Look for business connections and opportunities everywhere to drive business relationships and opportunities,” Wilgenbusch advised.
- Focus on what you love. One of the main benefits of being an HR independent contractor is the flexibility to choose what you work on — so choose to work on the projects, with the clients, and in the areas of Human Resources that you really love. “Before launching your practice, distinguish between what you can do and what you love doing — [and] create a niche based on the kind of work you love,” Kiner advised. “You’ll enjoy your work more, and clients will remember you when they know exactly what kind of problems you can solve.”
Especially during this time of widespread reevaluation of the nature of work and what makes work meaningful, now is a great time to make a change if that’s something you’ve been longing to do for a while. And working as an HR independent contractor can be incredibly rewarding and fulfilling work. But if you’re used to a full-time staff job at a company — and haven’t prepared in advance and aren’t sure what to expect — becoming a contractor can be a rude awakening. By taking the time to learn the ins and outs and ups and downs of being an HR independent contractor, and doing as much advance preparation as possible, you can help make the transition from full-time employee to contractor as smooth and successful as possible.