What is the difference between a temporary employee & a contract employee?

Written by lucy friend
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A temporary or contract employee are similar in many ways, but notable differences can distinguish them. This includes the work they perform, federal laws and how an employer hires them.

Temporary Employee

A temporary employee is hired to fill a temporary employee vacancy for an organisation. Some organisations use temporary employees for short-term projects that require additional employees to complete, and use a broker or staffing agency to find a qualified candidate for the temporary opening.

Contract Employee

A contract employee is hired by an organisation to complete an assignment or project, and may have expertise related to the subject matter. These professionals typically negotiate a contract and can be paid hourly or per project. Most contract employees are considered independent contractors.

Federal Laws

Federal laws apply requirements to qualify an employee as a contract or temporary employee, which address possible misuse or additional tax deductions for an employer.

1099 or W2

Temporary employees are typically the federal employment status of W2. Contract employees often qualify federally as an independent contractor or 1099. Both of these have financial advantages and disadvantages for the employee and hiring organisation.


An organisation often benefits from these professionals in a variety of ways, which can include expertise, tax deductions, continuing the work of an absent employee and completing required projects without hiring a full-time employee.

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