The "Full-Time" Work Tug-of-War: Freelancers vs Employers

As a freelance professional, you keep on seeing job ads on LinkedIn and other sites where the prospective employers looking for remote workers offering flexible work-from-home arrangements yet demanding that you work on a full time basis without the usual perks afforded to a full time employee. Many even insist that you work as an 'independent contractor' instead. Why is this becoming all too common these days?

We all know that the rise of the freelance and gig economy has transformed the modern workforce, with millions worldwide now favoring self-employment over traditional roles. In fact, 2023 saw the global freelance economy grow by 15%, reaching over 1.1 billion freelancers globally. This shift reflects a significant desire for flexibility, autonomy, and a better work-life balance among workers. Yet, as demand for freelance talent rises, many employers are turning to freelancers for full-time contributions without extending the benefits and security typical of traditional employment.

 

 

This trend — of seeking full-time commitment from independent contractors — has sparked questions and debates around motivations, fairness, and sustainability for both employers and freelancers. Companies often save on costs by hiring freelancers instead of employees, avoiding expenses associated with healthcare, retirement, and other benefits. Meanwhile, freelancers face the challenge of balancing their need for flexible work arrangements with the increasing demands placed on them by clients. This article dives into the reasons behind these practices, examines the implications for freelancers and employers, and considers potential solutions for creating a more balanced freelance-employment model in the evolving world of work.

"Full-Time" Without the Benefits

For many employers, hiring full-time employees can be costly and administratively complex. By classifying workers as 'independent contractors,' employers are able to reduce their expenses while maintaining the flexibility they need to stay agile in a competitive market. In short, freelancers have to let go of certain benefits in order to achieve greater flexibility. Here’s why this approach appeals to employers and how it saves them money and administrative effort.

 

Significant Cost Savings

Hiring a traditional employee involves considerable expenses beyond salary. Employers are typically required to cover payroll taxes, health insurance, retirement contributions, and other benefits. Employers can save up to 30% in payroll-related costs when they hire freelancers instead of full-time employees. This percentage accounts for substantial savings on items like social security contributions, unemployment insurance, and workers' compensation.

Additionally, health insurance premiums have surged in recent years, with average annual costs for employer-sponsored family coverage exceeding $20,000. Avoiding these costs by hiring freelancers allows employers to reallocate resources to other business needs while also preserving their budget.

Flexibility to Scale Workforce

Employers in industries with fluctuating demands often find freelance hiring more practical. The technology, media, or marketing sectors frequently experience shifting project scopes or client demands. Hiring freelancers allows them to scale their workforce up or down as needed without the complexities of hiring and onboarding permanent staff or conducting layoffs during quieter periods.

This flexible model is beneficial for managing costs efficiently. Freelancers can be brought on for specific projects or busy seasons, then released without severance or additional costs once the work is complete. By relying on freelancers, employers can match their staffing levels precisely with current project demands, reducing overhead associated with retaining a full-time workforce.

Reduced Legal and Regulatory Burdens

Hiring full-time employees brings legal obligations and risks. Employment laws require companies to provide certain rights and protections to employees, such as paid leave, overtime pay, and protection from wrongful termination. These obligations don’t apply to independent contractors, giving employers a less risky and less regulated hiring arrangement.

Furthermore, layoffs or terminations can be legally and financially complicated for employers, with severance payments and potential litigation as risks. A single wrongful termination lawsuit can cost companies an average of $200,000. By working with freelancers, companies reduce the legal risks and liabilities associated with employment laws, allowing them to maintain control over staffing without the costly commitment of employee protections and severance payouts.

Freelancers' Perspective

For freelancers, the primary appeal of independent contracting lies in the freedom to control their work schedules, choose their projects, and maintain a healthy work-life balance. In fact, a 2023 survey by Upwork found that 74% of freelancers cited flexibility as their top motivation for pursuing freelance work, underscoring a strong preference for autonomy over the constraints of traditional employment. This section delves into the freelancer's perspective, highlighting why they value independence and the challenges they face when full-time expectations from clients disrupt this balance.

 

Work-Life Balance

The appeal of freelancing lies in the ability to create a customized work-life balance. Unlike traditional employees bound to a specific schedule, freelancers often have the freedom to work when and where they choose, allowing them to structure their days around personal commitments, family, and hobbies. This flexibility is especially valuable to those who prioritize autonomy and self-management, as it enables them to optimize their productivity while maintaining personal well-being.

Furthermore, the independence of freelancing allows individuals to select projects that align with their professional interests and skills. This choice gives freelancers more control over their career trajectories, encouraging specialization in areas they enjoy and excel in.

Multiple Income Streams

In the era of side hustles, multiple income streams have been promoted by many influencers and content creators. It's now possible thanks to the advantage of freelancing, which allows you to work with multiple clients thereby diversifying your income streams and reduces the financial risk of relying on a single employer. For freelancers, juggling multiple projects provides both financial security and professional variety, as they’re able to develop new skills, expand their networks, and access a wider range of opportunities.

This variety is one of the main attractions of freelance work, as it counters the monotony that can come with a single full-time role. Freelancers can continuously evolve their careers by accepting new and different projects, something that is often limited in traditional employment settings, where job responsibilities can become repetitive and restrictive.

The Challenge of Full-Time Expectations

While freelancers are drawn to flexibility, the growing trend of full-time demands from clients presents challenges that can compromise their initial reasons for freelancing. In today's on-demand culture, some clients expect near-exclusive availability and full-time dedication and freelancers find themselves overextended and facing blurred boundaries between work and personal life. This constant demand for availability can lead to burnout, particularly when freelancers juggle multiple clients each with similar expectations.

The stress of managing full-time workloads without the support and structure of traditional employment can strain freelancers’ productivity and well-being. Without the benefits, job security, or paid time off of a traditional role, the demands of full-time freelance work can be exhausting and financially precarious. Consequently, many freelancers find themselves reconsidering contracts or setting clearer boundaries to protect the very flexibility and autonomy they sought when they entered the freelance workforce.

The "Full-Time" Freelancer Paradox

While the freelance model offers benefits like flexibility and autonomy, the increasing demand for full-time contributions from freelancers creates unique challenges and risks for both freelancers and employers. Misclassification, high stress levels, and a lack of benefits are some of the most pressing issues within this arrangement, posing financial, legal, and emotional concerns for freelancers.

Misclassification

In the United States, there is a legal distinction between an independent contractor and an employee. It is important to note that each classification comes with distinct obligations and protections. Misclassifying workers as freelancers rather than employees can have serious legal consequences for employers.

In the landmark case Dynamex Operations West, Inc. v. Superior Court of Los Angeles, the California Supreme Court established stricter guidelines for determining whether a worker is a contractor or an employee. Known as the “ABC Test,” this framework requires companies to prove that a contractor is truly independent by demonstrating that they control their own work, operate outside the employer's usual business, and provide services to other clients.

Failing to meet these criteria can lead to lawsuits, fines, and back payments for wages and benefits that should have been provided to misclassified employees. This risk incentivizes companies to more carefully review their classification practices, especially in cases where freelancers are fulfilling ongoing, full-time roles. Freelancers, on the other hand, face the risk of losing work if stricter enforcement leads employers to limit their use of contractors or to impose more stringent contract terms.

Higher Stress and Burnout Rates

The lack of structural support systems that traditional employees often rely on can contribute to increased stress and burnout for freelancers. Studies have shown that contractors, particularly those working full-time for a single client, report burnout levels higher than those of traditional employees. Freelancers are often expected to handle various roles — such as client relations, project management, and technical tasks — without the collaborative support found in a typical office environment. Additionally, the pressure to deliver consistently high-quality work in order to retain clients can lead to long work hours and minimal time off.

For freelancers working primarily with one client, the boundaries between work and personal life can blur, especially if clients expect them to be available for extended hours. This can quickly become overwhelming, leading to exhaustion and decreased job satisfaction. Freelancers must balance these demands while bearing full responsibility for their business operations, which can amplify stress and further contribute to burnout.

Financial Insecurity

One of the most significant downsides of full-time freelance work is the absence of traditional employment benefits such as health insurance, retirement contributions, and paid leave. Without employer-sponsored benefits, freelancers must pay out of pocket for health insurance and save for retirement, expenses that can consume a substantial portion of their income. Most freelancers have minimal savings, largely due to income unpredictability and the high costs associated with securing their own benefits.

This financial insecurity can have long-term repercussions on freelancers’ well-being and stability. Paid sick leave, vacation time, and retirement savings are often out of reach, making freelancers particularly vulnerable to unexpected expenses and periods of low income. Additionally, the lack of retirement contributions can impact their ability to save for the future, creating financial stress and insecurity as they age. As such, freelancers must carefully manage their finances to maintain stability, which can be challenging in an environment where income is variable and benefits are self-funded.

Solutions for a Sustainable Model

The growing reliance on freelancers and contractors has sparked a call for more sustainable and balanced models of employment that address both the flexibility freelancers value and the stability they often lack. As traditional classifications of “employee” and “contractor” become increasingly outdated, new solutions and legislative proposals are emerging to better support independent workers and their unique needs.

Bridging the Gap

One promising direction is the introduction of “third categories” of employment, which sit between traditional employment and freelance contracting. This concept aims to create a classification for workers who provide consistent contributions without qualifying as full-time employees, addressing a need for basic benefits without all the obligations of a standard employment contract.

California’s Proposition 22 is a prominent example, designed for gig workers in companies like Uber and Lyft. While it does not classify drivers as employees, Prop 22 grants them certain protections, such as health insurance stipends and injury protection, recognizing their contribution without creating a full employment relationship.

Although the legislative proposal has generated controversy, particularly around its limitations and lack of comprehensive benefits, it highlights a potential framework for supporting gig workers and freelancers with essential protections while maintaining flexibility. This third-category model may inspire similar initiatives in other regions, allowing companies to formalize relationships with long-term freelancers without imposing the costs of full-time employment.

Efforts to Protect Freelancer Rights

Governments worldwide are beginning to introduce legislation that addresses the classification and rights of freelance workers. In the European Union, new proposals for regulating gig economy platforms suggest a shift toward stricter definitions for gig workers, aiming to ensure fair treatment and prevent misclassification. The EU’s efforts emphasize the importance of extending social protections—like health insurance, retirement plans, and paid leave—to freelancers who rely on a single platform or client for their primary income.

These legislative moves signify a growing recognition of freelancers' contributions and the potential need for a universal framework that can protect freelancers across various industries. As these regulations develop, they may create pressure on companies to offer more support and security to their freelance workforce, even if not through traditional employment.

Company-Driven Solutions

Companies can also play an active role in establishing a sustainable freelance-employer model. Setting clear expectations through well-defined contracts can prevent misunderstandings and burnout, preserving the freelancer’s autonomy while meeting company needs. Companies that rely heavily on freelancers can also offer targeted benefits—such as access to flexible health insurance, retirement savings options, or “freelance PTO”—to make freelance work more secure and appealing.

Flexible benefit options not only attract talented freelancers but also foster long-term relationships that benefit both parties. Freelancers gain some stability and support, while companies retain experienced contractors who are invested in the organization’s success. Offering these benefits can also set companies apart in a competitive freelance market, positioning them as supportive and forward-thinking employers of freelance talent.

The evolution of work requires new models that balance the freedoms of freelancing with the security of traditional employment. As freelancers continue to be a cornerstone of many industries, flexible but supportive structures will be crucial. A sustainable freelance-employer model would allow freelancers to enjoy the independence they value while receiving essential protections and benefits that improve their financial and personal well-being.

In the End

The rise of the freelance economy has transformed the labor landscape, offering millions the flexibility and autonomy they seek. However, as employers increasingly turn to freelancers for full-time contributions without the associated benefits of traditional employment, it has opened new sets of opportunities and challenges for both parties. While companies enjoy cost savings and flexibility, freelancers face the risks of misclassification, burnout, and financial insecurity.

Ultimately, balancing flexibility with security is essential to ensure the well-being of freelancers while allowing companies to thrive in an increasingly competitive landscape. As stakeholders engage in meaningful dialogue and collaboration, they can create an environment that promotes a fairer, more inclusive future of work—one where freelancers can flourish without compromising their independence, and employers can leverage top talent without sacrificing responsibility or ethics.