Independent Contractors
• The focus of this report is small business use of independent contractors to perform three
different types of functions – construction, transportation, and computer services.
• Twenty-one (21) percent of non-construction small businesses engaged an independent
contractor in the last three years to do construction-type work for their firms.
• Half of small business owners bid their construction jobs; half did not. Of those soliciting
bids, price was the most important factor when selecting the bid winner in only 16 percent
of cases. Quality (workmanship) was important more often as was a prior relationship. The
lowest bid won in one-quarter (28%) of cases.
• Small business owners were generally satisfied with construction work done for them. Sixtythree
(63) percent would definitely hire the contractor again, 28 percent probably would.
Just 4 percent definitely would not.
• Twenty (20) percent of non-transportation businesses have employed at least one person
as a driver in the last three years to deliver, haul or otherwise move things or people for
the firm. The most frequently cited very important reasons for hiring employees rather
than using independent contractors were the flexibility employees bring, their reliability and
accountability, better coordination with other activities in the business, and greater control
over times, routes, etc.
• Twenty-one (21) percent of non-transportation businesses have used independent contractors,
excluding the U.S. Postal Service, UPS, FedEx, etc., and large over-the-road trucking
firms to fill their delivery or hauling needs. The most frequently cited (overwhelmingly) very
important reason for using independent contractors rather than employees was the absence
of need to invest in vehicles, insurance, and similar overhead. Other very important reasons
often cited were deliveries are too far and varied and the irregular flow of shipments.
• In the last three years, 8 percent of non-transportation firms employed both hired employees
and independent contractors to perform their necessary transportation functions.
• Twenty-three (23) percent of small businesses employed people in the last three years to
install, service, repair or instruct people in the use and maintenance of their computers and
other information technology equipment. The most frequently cited very important reasons
for using employees rather than independent contractors were greater control over performance
and quality, reliability and accountability, helping others keep up with the technology,
and concern over delay and timeliness of response among contractors.
• Forty-two (42) percent engaged independent contractors to perform computer services.
The most frequently cited very important reason for use of independent contractors rather
than employees is that different problems require different expertise and the skills brought
in are needed for only short periods of time.
• Eighteen (18) percent have hired both employees and independent contractors to fill their
computer services needs.
• In both transportation and computer services, employee cost is usually a less important factor
in the decision to select employees or contractors to perform the work than other factors.
Cost is cited as a very important reason for choosing one as it is for choosing the other.
