The Different Types of Workers You Can Hire at Your Business

Please note that this article is intended for educational purposes only and should not be deemed to be or used as legal, employment, or tax advice. For guidance or advice specific to your business, consult with a qualified professional.

It’s important to know about the types of workers that exist, whether you’re hiring your first employee or rethinking your existing team’s needs.

As many owners try out new ways of doing business, like offering takeout or curbside pickup for the first time, those operational changes influence who you need to staff for those new roles. Understanding who you can hire can also help you calibrate your staffing needs to changing customer demand.

The good news is that you have a lot of options when bringing on new team members, and you can also bring on a few different types, depending on where your business is headed. This primer on the types of employment will help you make a more informed decision when figuring out who to hire this year.

What to consider when thinking about different employment types

Understanding the difference between employees and contractors is the first step because it not only impacts the taxes you pay and the benefits you offer, but it will also help you figure out who you need to bring on. Once you nail that down, you can also start thinking through your hiring budget, whether you’re reinvesting profits, or simply figuring out what you can afford.

Before going through this list of worker types, ask yourself a few questions to figure out the different kinds of staff your business might need this year. 

  • How long do you need help?
  • How many hours do you need this person to work?
  • What kind of skills should they have?
  • How does that compare with the rest of your team, if applicable?
  • If temporary, will you eventually need someone more long term?
  • Are you planning on hiring them yourself or using a staffing agency?

These questions will help you compare your needs with the nuances of each type of worker, so you can decide who will work best for your business. 

Different types of employees

As an employer, when you hire employees, you control their work, including what is done and how. Employees are on your payroll, and you’ll file Form W-2 for each person every year. There are a few different types of employee classifications. 

Full-time employees

Full-time employees work a minimum amount of hours determined by you, the employer, and are typically eligible to receive health benefits. If you have constant, steady work for 30 or more hours a week, you may consider hiring a full-time worker. When creating your hiring budget, make sure to include expenses related to compensation and benefits, payroll taxes, recruiting, and employee training.

Different governing bodies have different definitions of full-time employees, but the “full-time” status matters if you offer health insurance. If you have 50 or more full-time equivalent (FTE) employees on average over the course of a year, that makes you an applicable large employer (ALE), meaning you’re subject to the Employer Shared Responsibility Provisions and, among other things, you’re required to offer health insurance to your full-time employees under the Affordable Care Act, or pay a penalty.

While the Fair Labor Standards Act (FLSA) doesn’t officially define full-time employment, the IRS and the Bureau of Labor Statistics (BLS) have definitions, outlined below. 

  IRS BLS
Full-time employee 30 or more hours a week, or at least 130 hours a month More than 35 hours a week
Part-time employee Less than 30 hours a week, less than 130 hours a month 35 hours or less a week

Part-time employees

Part-time employees are typically those who work less than the full-time hours you decide on for your business, and they’re usually paid hourly.

Similar to the full-time classification, there’s no hard-and-fast rule for how to define a part-time employee, unless you offer health insurance. Under the Affordable Care Act (ACA), part-time employees are those who work fewer than 30 hours a week or 130 hours a month, on average.

Temporary employees

Similar to seasonal employees, temporary workers, or temps, are brought on for a specific amount of time to do work generally done by your employees, but they typically don’t receive benefits. Temp employees can work full- or part-time hours, and many businesses hire them through temp agencies, which specialize in this type of short-term hire.

Some businesses hire temporary workers through a temp-to-permanent arrangement which means there is a probationary period before they can potentially move into a full-time role.

Seasonal employees

This type of worker is hired during busy seasons to help fill staffing gaps. Seasonal businesses that only operate a few months out of the year, like a Christmas tree farm for instance, would hire seasonal workers with an agreement that the gig is temporary.

This type of worker is part time, even if they do work full work weeks, because they don’t work throughout the entire year. Since seasonal employees are temporary, they may be entitled to unemployment benefits in some states, like California.

Interns

An intern is typically someone looking for more work experience by trying out an entry-level role. In some cases, companies use internships as a way to identify talent for full-time positions in addition to offering a mentorship program to help interns advance. In many cases, interns work in exchange for school credit and they work for a short period of time, like over the summer or for a semester. Some internship programs are full time, while others are not. 

Businesses in the private sector are required to pay interns the minimum wage plus overtime if they’re classified as employees, and they typically don’t receive benefits. This overview from the DOL has more details about hiring interns.

Apprentices

An apprenticeship is a paid job training program that allows participants, called apprentices, to learn the ins and outs of their field through classroom instruction. Unlike an internship, at the end of an apprenticeship, participants are more likely to be guaranteed a role.

Apprenticeships are common among restaurants, home repair professionals, and craft-based businesses, along with other specialized areas. Check with your state labor department for more rules about paying apprentices.

Different types of contingent workers

Contingent workers are self-employed, and according to the IRS, they’re required to pay self-employment tax if they earn more than $400 in a given year. This type of worker is not an employee, meaning they’re not on your company’s payroll, has control over their work, and can work independently. 

As an employer, you’ll send Form 1099-NEC to each contingent worker you pay more than $600 to in a year. Paying contractors and filing taxes can get complicated, which is why many businesses use online payroll software to help streamline the process.

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Under the umbrella of contingent work, contractors, consultants, and freelancers are typically used as synonyms, although there are some differences. When creating a hiring budget, keep in mind that contingent workers can charge hourly, by project, or even a performance-based rate, once you agree on the deliverables. 

Independent contractors

Independent contractors are self-employed, meaning they work for themselves. You can hire an independent contractor to work on small or large projects, or on a contract basis, hence the term.

Contractors have their own business entities, which can include sole proprietorships, LLCs, corporations, or partnerships, and they can work for more than one client at a time.

Consultants

A consultant is an expert that provides advice in a particular area, but they don’t necessarily execute the advice. Unlike consultants, contractors and freelancers typically execute on the work as well. 

Freelancers

The freelancer label is sometimes used interchangeably with contractors and consultants, however, workers in more creative areas tend to use the term more often. For instance, designers and writers may call themselves freelancers more often than independent contractors, even though they’re all technically contingent workers.


Whether you hire contractors or employees, or a blend of both, correctly classifying the workers on your team is key. Once you classify the different types of workers you bring on board, payroll software can help you accurately pay each type, while helping you comply with the applicable laws in your area.