In a time of economic uncertainty, employers would think of ways to cut cost and reduce overhead. One of the most popular tactics is to change an employee status into an independent contractor to cut cost and reduce tax burden. However, this is a double edge sword as your action would bring on consequences as well.
Changing employees into independent contractors is like a demotion to them. Once your employees become independent contractors, they will no longer have the loyalty they once had of your company. That’s because they no longer feel committed because of their demotion. By being demoted when times are uncertain, they feel like there is no future for them and that the inevitable will eventually come of being laid off.
With little to no loyalty, your employees’ new found status might start thinking of their own ends instead of the company. They might steal, leak information, and even sabotage the company for their own benefits which can have a devastating effect on your business. You never know if their pent up frustration, anger and hatred from their demoted status will be subsided which is harmful to your company.
Consider the risk before the advantage when changing your employees into independent contractors as their demoted status causes backlash from their emotions. Worst, their demotion does not increase their loyalty but decrease them greatly. It is not wise to change employees into independent contractors especially during economic uncertainty.
