Time Tracking Software for Contractors and Employees: What’s the Difference?

Businesses of all shapes and sizes have to weigh the differences and legalities when it comes to hiring staff. Depending on your company’s jurisdiction, you may have different overarching rules and labor laws that impact the expectations for job roles such as employees and independent contractors. 

As a business owner or human resources (HR) professional, you might be approaching the issue of time tracking from a strictly budgetary and financial standpoint. However, there are other considerations that need to be made. 

There are, of course, different benefits, costs, and obligations associated with independent contractors, but you can ask them to time track. Now independent contractors make up almost half of staff at technology firms. And estimates suggest that US companies can save as much as $100,000 a year per worker. 

Based on this, it’s only natural that you’ll come across this distinction in the near future. Here’s a brief guide on time tracking contractors vs. employees:

Understanding Contractors vs. Employees

Before you begin time tracking, the head of HR will need to correctly designate each worker as being an employee or an independent contractor. This distinction is important because employees require additional taxes, overhead, and benefits and the company is liable for it. It also helps to define the employer-employee relationship.

Your state and/or country will have labor laws concerning contractor and employee minimum wage, overtime page, employment tax, workers compensation, and withholding obligations. It’s vital to understand these first because that will impact payroll and timesheet management. 

So what’s the difference between a contractor and an employee? 

From the perspective of hiring, employees will get way more benefits compared to independent contractors. Independent contractors will typically negotiate a payment agreement that includes an hourly or per-project wage, timing details, dispute information, and more. This is compared to an employee, who can be scheduled to work, managed more directly, and more, all because the company has more liability to pay payroll taxes on the employee’s behalf. 

It’s important to recognize that just because you might call a worker an independent contractor, this does not mean that they are one. You simply cannot treat your workers as employees and pay them like independent contractors.

Most often, a small business might opt to bring on contractors because of the cost savings. Know that you can still track time and manage your contractor but there are considerations to be made about job requirements.

While this blog will not go into the ins and outs of these differences, know that they are important when dictating time commitments. One key difference is that an individual becomes an employee when they must file timesheets or be monitored during specific times. There are other conditions as well, like determining what equipment your contractors use, where to purchase supplies, and whether to hire assistants to help with work (among others).

Time Tracking Contractors

When it comes to time tracking for a contractor or freelancer, the business and the contractor will come to an agreement for an hourly rate, if tracking by the hour, a set amount of hours, the max amount of hours they can hit, and the job role. Also note that some contractors will charge by project, as well; this will usually not be tracked hourly. 

With contract employees, employers cannot require employees to work at a certain time, attend certain meetings, and more. These expectations are different with employees, who you can require to complete certain tasks. 

There are ongoing challenges when working with contractors, but effective management and time tracking will help with a number of these issues. To start, a contractor who is properly trained will be able to understand their job roles and feel motivated to complete tasks on their own time. Having them use a time tracking tool will then be seen as a means to an end. 

Time tracking software is the most effective way to ensure that contractors are working; this is even more important for remote workers. However, there are some concerns over time tracking software that might take a screenshot of a computer or tracking locations, for example. 

When tracking time for contractors, your workers have a right to know the capabilities of the software, the importance, and how the data from the software is used. Improper communication may lead to missed deadlines, unclear expectations, and considerable frustration. 

Time tracking software will simplify the frustrations of independent contractors and especially remote contractors. Time tracking software can be downloaded onto any computer and then the contractor can track the projects and tasks that they are working on so that the employer understands that their agreement is being upheld.

Time Tracking Employees

Hiring and time tracking employees give businesses a lot more freedom. While there are still privacy laws to be mindful of, employees are allowed to be monitored within reason during work hours. This includes work-from-home and remote work as well.

When you have employees, businesses are allowed to dictate which devices they work on, the security and parameters of those devices, and to track activities on those devices. When work-from-home, employers need to be more careful about privacy invasion. For example, it’s not a good idea to monitor employees through their company computer’s webcam. However, you can track the activities on that computer at any time. 

Employees are also legally allowed to submit timesheets in most jurisdictions. Therefore, you can determine when your employees show up to work and the hours they need to complete. This includes the details of your employee time tracking. 

Time tracking software often includes a timesheet, therefore, this option makes the most sense. With this software, employees can log in or clock in and then track the projects and tasks that they are working on throughout the day. They would also log off at the end of the day. 

Time tracking software can be installed remotely, so your IT team with admin access to any company computer or on the company network can complete this task remotely and monitor it from a remote console. Use time tracking for workstations and Terminal Servers (like Citrix) to better understand your employee activities.

Implementing Time Tracking in Your Business

Using time tracking software in your business is simple. No matter if you have contractors or employees, ask that your workers track time so you have a better understanding of the work being done in your business.

Time tracking software like SoftActivity is far more comprehensive than simply keeping time logs. In fact, this software is a powerful tool that can also monitor against insider threats and provide advanced threat detection and security. 

Features of SoftActivity monitor include: 

• Viewing multiple user activity accounts on the same screen in real-time
• Application and website tracking
• Records of emails and other communications logs
• Reports for security and productivity
• Instant notifications for security concerns
• Productivity and security audits
• Investigations for security incidents, and flagging high-risk employees
• Monitoring vendor access to company equipment
• HIPAA and PCI compliance auditing
• Insider threat detection
• Prevention of data leaks and property theft from insiders
• Keystroke logging (if applicable)
• Billable hours vs. non-billable hours
• Integration payroll
• Idle time tracking
• Integration timesheet
• Wasted time reports

Ready to get started? Reach out to SoftActivity monitor today to learn more!

By SoftActivity Team.