The Rise of Freelancers and Contractors: How Payroll and HR Can Support the Gig Economy
by Christina Thompson – St. Clair, Vice President of Sales
The modern workforce is shifting, and it’s not just a trend. The gig economy, once considered a side hustle culture, has matured into a significant force in the labor market. Freelancers, independent contractors, and on-demand workers now make up a large and growing portion of today’s workforce.
For HR and payroll professionals, this shift presents both opportunities and challenges. Supporting this new labor model requires rethinking traditional systems, improving flexibility, and ensuring compliance without compromising efficiency.
The Freelance Boom: Why It’s Happening
Several factors are driving the rise of freelance and contract work:
- Flexibility: Both workers and companies value flexible work arrangements.
- Business Agility: Organizations want to scale teams quickly without long-term commitments.
- Remote Work Acceptance: Remote collaboration is now standardized, making freelance work more practical and productive.
HR’s Evolving Role in the Gig Economy
HR departments must adapt to meet the needs of a more dynamic workforce. Here’s how:
- Redefining Talent Management
Contractors aren’t permanent employees, but they still represent the brand. HR must create streamlined onboarding processes, define expectations clearly, and ensure that freelancers have the tools they need to succeed, just like full-time staff members.
- Fostering a Cohesive Work Culture
Maintaining a consistent company culture with a hybrid team (permanent + freelance) is challenging. HR leaders can bridge the gap by:
- Including freelancers in team meetings where appropriate.
- Recognizing their contributions.
- Facilitating communication between teams.
- Compliance and Classification
Misclassifying employees as contractors is a major risk. HR must work closely with legal and finance teams to ensure proper classification under labor laws such as the IRS guidelines. Mistakes can result in serious financial penalties and damage to employer reputation.
Payroll’s Critical Role in Supporting Freelancers
Unlike salaried employees, freelancers don’t follow a set pay cycle, which can add complexity to payroll management.
- Flexible Payment Options
Freelancers expect to be paid quickly and conveniently. Payroll options in place should include:
- ACH and digital payment options such as Pay Cards.
- Earned Wage Access (EWA), such as through our ZayZoon, Payentry’s EWA partner.
- Invoice management and tracking.
- Automated Tax Reporting
Contractors handle their own taxes, but businesses are still responsible for issuing the correct forms (e.g., 1099-NEC in the U.S.). Modern payroll systems automate this process and stay updated with evolving tax regulations.
- Integrations and Reporting
Payroll teams need visibility across all worker types. Tools that integrate contractor data with core HR systems make it easier to track project spend, manage budgets, and evaluate performance, which are key to strategic workforce planning.
Embracing Technology for a Hybrid Workforce
The right technology helps companies seamlessly manage freelance and full-time employees together. At Payentry, our solutions provide:
- Combined HRIS and contractor management features.
- Automated onboarding workflows.
- Self-service portals for contractors.
- Data security and compliance.
A New Era of Work
The freelance and contractor economy is not a temporary trend. It’s a fundamental shift in how work gets done. For HR and payroll teams, supporting this change means being agile, tech-savvy, and compliance-focused. Those who embrace the gig economy with the right systems and strategies will be better positioned to attract top talent and thrive in a more flexible, modern world of work.
Need help managing a hybrid workforce?
Explore how modern payroll and HR platforms like Payentry can simplify contractor management, improve compliance, and streamline payments, all in one place.
Want to learn more about Payentry’s solutions?
Let’s Talk. Our personnel management professionals provide expert support in payroll, workforce management, human resources, benefits administration, and retirement planning services.
For the latest updates, to view our webinars, and listen to our podcasts, visit and follow us on LinkedIn, Facebook, X, Instagram, YouTube and Spotify.
Learn more about how we can help you achieve your goals, address challenges, and resolve issues with speed and precision by conveniently scheduling an appointment with our team. And to speak directly with an experienced payroll professional, please contact us at 888.632.2940 or simply Click Here and Let’s Talk.
* MPAY LLC dba Payentry (Company), is not a law firm. This article is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other Company materials does not create an attorney-client relationship. The Company is not responsible for any inadvertent errors that may occur in the publishing process.
