Freelancers Don’t Get Sick Pay

We actually work for a living.

It occurred to me the other day that there’s a huge difference between employees and freelancers. I don’t mean to say that I suddenly saw the light — I didn’t. I’ve known the differences for a long time. But the other day, I actually stopped for a moment to think about them. I thought I’d share some of my thoughts here, laid out in a simple table to make comparison easier.

Employees Freelancers
Employees can stop looking for work once they get a job. The only times they need to look for work again is if they want to change jobs, they get fired, or they need a second job. Freelancers are always looking for work, even when they’re working. The ability to earn a living depends on having the next job lined up.
Employees seldom have to worry about losing their jobs to someone who claims he can do it cheaper. Freelancers are constantly competing for work with others who claim they can do the same job for less money.
Employees usual do one job at a time, although that job might entail several concurrent projects for the same employer. Freelancers often work on several jobs for several clients concurrently.
Employees are usually given all of the tools and equipment they need to perform their jobs. These tools are usually purchased, maintained, and updated by their employers. Freelancers usually have to buy, maintain, and update all of the tools and equipment they need to perform their jobs.
Employees often spend part of their workday socializing with coworkers around the water cooler, coffee room, offices/cubicles, cafeteria, etc. Freelancers often work alone. Most time spent socializing is not time they’re being paid for.
Employees often get benefits that include paid vacations, paid holidays, paid sick days, health care, pension contributions, profit sharing, and bonuses. There are holiday parties, company picnics, and sometimes even birthday cakes. Freelancers don’t get benefits. If they can’t work because of illness, they don’t make money. In the U.S. (and some other countries), they have to pay for their own health care, often at extremely high rates. There are no holiday parties, company picnics, or birthday cakes.
Employees have a predetermined workday, such as 9 to 5. They also get scheduled days off, like weekends and holidays. If they don’t feel like coming into work, they can take a paid sick or personal day off. The flip side of this is that an employee has a limited amount of time off. Freelancers work as long as they need to to get the job done. If that means 12 hour days and lost weekends, so be it. If they don’t feel like working in the middle of a job, that’s too darn bad; the job needs to get done on time. The flip side of this is that a freelancer can have as much time off as he wants, as long as he works enough to earn enough money to survive.
Employees are usually not bothered by their bosses outside their normally scheduled workday. Freelancers can be bothered by clients any time the client wants to make contact (although most clients keep contact within their working hours).
Employees can have annoying or even stupid bosses. Freelancers can have annoying or even stupid clients.
As long as an employee performs his job to some level of satisfaction, he’ll likely remain employed. A freelancer needs to perform high quality work for every job to set himself apart from the competition, with the hope that the client will either give him future work or recommend him to others.
Employees get paychecks. The government ensures that they get paid. Freelancers issue invoices and spend time following up on accounts receivable. They sometimes have to remind, nag, and then possibly sue clients to get paid.
Employees have payroll taxes taken from their pay and remitted to the government. In the U.S., their employers pay 50% of their social security tax liability. Freelancers don’t usually have taxes taken from their pay and remitted to the government. They are required to submit taxes quarterly, along with the related paperwork. If they don’t submit on time, they could be penalized. In the U.S., they are personally responsible for 100% of their social security tax liability.

What did I leave out? Employees and freelancers, use the Comments link or form to fill us in.

7 thoughts on “Freelancers Don’t Get Sick Pay

  1. A superb summary!!!

    Although perhaps somewhat loaded with sentiments, there are some additional points;

    If unemployed, a worker receives unemployment benefits. A Freelancer has to dig into savings

    If injured on the job, a worker can receive disability compensation, even for the rest of his projected remaining working life. A freelancer receives none for work related injuries

    finally – just had to mention it –

    Some receive minimal but livable subsidies if they don’t work at all (rent allowances, food stamps etc.etc.) Freelancers still have to carry obligations such as payments for equipment they needed to buy or lease as well as an assortment of fees and insurances

  2. @eberhard weber
    Dang! I forgot this one.

    Unemployment — especially when it’s available for 2 years — is a major benefit to being on someone’s payroll.

    Disability is available to freelancers, but only if you purchase disability insurance in advance. I looked into it when my only work was as a writer and they wouldn’t sell it to me, claiming that since I worked at home I could still work when I was “disabled” and no one would know. (What a crock!) I could probably get it now as a pilot — if I paid the premiums.

    It basically boils down to this: If we don’t work, we don’t get any financial support (other than welfare or food stamps if we’re very needy).This was actually one of the main points I wanted to make.


  3. Excellent post. Things to think about long and hard for anyone thinking of going freelance.

    I’ve been freelance (sort of by accident) for 20 years, almost since I completed my BA degree in broadcast production. Random thoughts:

    *freelancing is not for undisciplined people, especially those with a home office. Though, the fear of not being able to pay your bills is certainly plenty of motivation to get up early and leave the TV off.
    *for all the hurdles of freelancing, the rewards are tremendous. Usually the client-vendor relationship is a much more ‘adult’ and equal relationship than boss-employee. Not always, but usually.
    *I can work how I please. I often have NPR or RAI (italian television) on in the background for white noise; I can easily tune in and tune out depending on the task at hand. It doesn’t distract me at all from my work (if it did, I’d just turn it off).
    *freelancing is definitely not for people who can’t cope with the lack of co-worker contact. Sitting at your desk without anyone telling you what to do, without co-workers to collaborate with, can be *very* lonely and *very* intimidating. I would submit that only kids are better-adapted to freelancing than others.
    *freelancing is definitely for people who are very intelligent and don’t like dealing with typical workplace stupidity, including co-workers and bosses who fear and loathe they perceive as being more competent than they are and will seek to sabotage you and keep you down.
    *freelancing is definitely for people who love what they do. I get up early and work late and don’t mind at all. Life is too short to spend so much of it doing work that you hate! (I even work on weekends, but SSSSHHH don’t tell my clients; I don’t want them to get the idea that they can call me on holidays, nights and weekends unless it’s a true emergency)

    I was not naturally born to the freelance career lifestyle, except for my independent streak. I was, and sometimes still am, an anxious person. What I can say is that freelancing has taught me a lot about life and myself, including how to cope with anxiety and how to perceive that things aren’t necessarily how they seem in a particular moment. It’s made me sharp (in the good way) at networking and building my career and interpersonal skills. The down side of being an employee is that these days there is hardly any such thing as ‘job security’. I think all employees would be wise to always be looking for the next opportunity. You never know when you will be RIF’d, no matter how good you are at what you do. Having to learn all over again how to look for work really sucks.

    Finally, I’d like to conclude by returning to what I said at the beginning – I’ve been freelancing nearly my entire career, since 1990 when working from home was a completely foreign idea to most 9-to-5’ers. I wish I had a buck for every time some slave of The Man told me, – explicitly or implicitly – to ‘get a job’, as if I sat around here eating bon-bons and watching “Oprah” all day long. My own father pretty much told me that over and over for years. As if clients just send me the four- and five-figure checks that pay my bills, because they like my winning personality.

    Today, I am certain a lot of those thoughtless cretins who over the years told me to ‘get a job’ have become personally familiar with how insecure their secure employment actually is. These days, working from a home office is no longer the strange and incomprehensible way of making a living that it seemed to many when I started doing it all those years ago.

    Meanwhile, I long ago got over their scorn. All I had to do was remind myself (and, sometimes, the offending cretin) that I lived a lifestyle they would envy. You see, for most of the past 20 years I’ve managed to make a decent (sometimes, VERY decent) income and take off during the slow summer months for weeks at a time and go travelling abroad. Meanwhile, they are chained to their desks whether they like it or not, whether there is work to do or not.

    I wouldn’t trade my career for working for The Man. No way. I’d be miserable.

  4. Oh, here’s something missing from your list:

    EMPLOYEES: You can apply for a mortgage with a year or two of 1040’s and your W-2 attached.
    FREELANCERS (PRE-HOUSING BUBBLE): Most mortgage lenders treat you as if you are an unemployed bum (my own ‘friendly’ credit union, where I’d kept my accounts for 15 years, pretty much gave me that treatment). The few who will even look at your application will demand three years’ worth of financial statements done by a certified accountant, along with the corresponding 1040 paperwork.
    FREELANCERS (DURING THE HOUSING BUBBLE): Everyone got a loan, even unemployed bums.
    FREELANCERS (POST-HOUSING BUBBLE): Unless you have enough cash on hand to make a substantial down payment, you are considered as credit-worthy as an unemployed bum, even if you have the paperwork in order to prove otherwise.

  5. Another missing item:

    EMPLOYEES: To file your taxes, collect your W-2s and any statements you might have regarding investments and mortgage interest paid. Enter them all in TurboTax. Print and submit. Done!

    FREELANCERS: Obsessively collect receipts and track your mileage driven. If you take the generally better deduction for actual vehicle expenses, keep all your fuel, insurance and maintenance receipts as well. Track your self-employed health insurance payments as well (for which you may well get no deduction, anyway). File them all away, then in January begin adding up all those scraps of paper, segregating expenses according to the type. Measure the part of your home dedicated to your office in order to calculate the home office deduction to which you are entitled. Gather up all those 1099s, hound clients who should have sent you one but didn’t (or did but it was incorrect), and account for payments not 1099’d. Spend at least half your time spent doing your tax forms, just filling out and double-checking the Schedule C. Print out about 20some pages when you are all done… and after all that, don’t forget to sign! Oh and by the way, if it turns out you owe significantly more in income taxes than you paid in estimated payments… either pay up by February 1st or be subject to a penalty!

  6. Employees can count on going to work from 8 to 5, M-F, for the foreseeable future, doing the same job at the same place. Freelancers can’t count on going to work, any set schedule, or who they’ll be working for. I’ve never worked harder than I am now as a freelancer. Sometimes I have an inverse schedule (today will be my Saturday, tonite my Monday a.m.). All this so I can go fly every once and a while….

What do you think?