Call Center Agents: Employees or Contractors?

Does your call center service provider hire agents as employees or contractors? If you are currently outsourcing customer service or in the process of selecting a vendor, it’s a critical, yet often overlooked, question to ask. While you may think this distinction doesn’t impact service delivery, in actuality the level of service customers receive is a direct result of the agents’ employment status.


Workforce Management

A major difference between companies with agents as employees and those that use contractors lies in the call center’s ability to control how, when, and where work is performed. Virtual centers operating through employee agreements can manage agents in ways that aren’t available when working strictly with contractors. This additional control provides three distinct client advantages:

1. Dedicated Agents

Most companies using the employee model require agents to commit to one client program, ensuring that each employee is completely focused representing a single brand. For this reason, employee agents are best suited for complex, unscripted interactions. This is in direct contrast to contractors who are usually routed calls from multiple clients and/or programs. The contractor model can work well for highly scripted calls like direct response infomercials or simple retail order taking, but imagine the confusion and possible frustration that could arise when one second a call is for a credit card billing question and then a minute later the next call is for tech support on a smartphone.

Account assignments also eliminate possible competitor conflicts. Employers can legally document that there are no conflicts of interest, so clients know their agents are not sharing proprietary, internal information.

2. Quality Assurance

Employment and labor laws in the U.S. are clear about what creates an employer/employee relationship. Most of these revolve around degrees of control. For companies to utilize independent contractors, they cannot set schedules, are not allowed to require more than very basic training, and are prohibited from providing other management or supervisory oversight. For this reason, the employee-based model is best suited for companies that have high standards for quality with defined service levels and metrics.

3. Brand Protection

Accurately conveying the attributes of a brand over the phone can only be accomplished when the agent answering the calls has intimate knowledge of a company’s culture and values. Virtual call centers using an employee-based model have the ability to recruit and train agents according to criteria developed in conjunction with the client. This helps ensure that assigned agents not only have great customer service skills, but also have experience in and knowledge of the desired industry. Matching agents to clients according to skills, interest and industry experience produces quality service that increases customer satisfaction and improves financial performance.

Agent Performance

Agents who are interested in becoming employees of a virtual call center are looking to dedicate themselves to a position, have a passion for customer service and enjoy focusing on one particular account. They are willing to commit to a set schedule, typically over 30 hours per week, and complete extensive paid training of usually two to four weeks.

Conversely, independent contractors receive minimal training and cannot be required to work a set schedule. Working 10 to 15 hours a week makes it difficult for them to gain the knowledge and experience needed to reach a high level of service proficiency.

Tax and Legal Implications

Employee misclassification is a reality in nearly every industry, including the virtual contact center market. With record budget deficits, the government has stepped up its investigation and enforcement activities, with plans to recoup $7 billion over the next 10 years from companies incorrectly passing off regular employees as contractors. The legal and financial risks posed by the contractor model are significant. If convicted of misclassification, contractor-model call centers face fines of up to $5,000 per agent including back taxes, unpaid overtime, worker’s compensation, benefits and more.

The contractor model forces agents to accept additional risks and headaches as well. Agent-contractors must form their own businesses, manage taxes and bookkeeping, pay for additional expenses like training, and live with unpredictable income.

It Makes a Difference

Deciding whether to hire employees or contractors is not new. In fact, according to an October 13th USA Today article, companies across the nation are "shifting to a more flexible workforce populated by temporary workers, contractors and freelancers" in order to save money.

Outsourced call centers are no exception. Hiring agents as employees can be more expensive for clients initially, but it simply offers a better way to care for agents and callers. Satisfied agents who enjoy their jobs and are passionate about their clients are more successful handling calls. This translates into bottom line benefits for everyone involved, including more tenured and experienced agents, improved performance metrics and happier customers.

No Sub-contractors

Some virtual call centers believe it is beneficial to allow contractors to sub-contract their calls to other individuals. While this does allow the initial contractor to increase his or her income by taking more calls, it means that clients have no idea who is handling their calls. In industries where customer service is the front line of communication, not being able to control who is interacting with your customers can be especially problematic.