TGL Trusted: Contractor vs. Employee Risk in Digital Marketing (With HR Allies)
As we continue the TGL Trusted series, we’re spotlighting the partners we trust to help organizations protect and strengthen their brands. In our last edition, we sat down with Friendly Design Co. to talk about intentional branding and the visual decisions that shape how brands are perceived. Today, we’re taking a closer look at one of the behind-the-scenes challenges that can quietly put brands at risk: Working with contractors.
For many digital marketing teams, contract work feels like a natural fit; however, that flexibility can come with hidden risks if the structure behind it isn’t as intentional as the work itself. Danielle Verderosa, Founder of HR Allies, has spent decades helping business leaders navigate those risks.
“My passion is turning HR confusion into clarity so leaders can focus on what they actually love: growing their business, not putting out HR fires.”
- Danielle Verderosa, Founder, HR Allies
Digital marketing agencies that rely on contractors need to understand these hidden risks, because what works operationally doesn’t always fly legally.
Why Digital Marketing Teams Rely on Contractors
Project-based work paired with fluctuating client demand makes contractors the logical choice for agencies. Designers and developers often work on short-term or variable projects, so hiring contractors helps agencies stay agile without overcommitting resources.
Contract work allows teams to scale quickly and meet deadlines, but operational convenience can sometimes mask underlying risks.
When Flexibility Becomes a Liability
Contractors are often treated like employees, or vice versa, which can be a recipe for disaster. Misclassification can lead to audits, back pay, fines, and, in extreme cases, lawsuits.
“Most agency owners don’t realize how exposed they are to HR risk until it’s too late. The biggest hidden landmine I see with agencies is misclassifying 1099 contractors who really should be W-2 employees.”
- Danielle Verderosa, Founder, HR Allies
This isn’t just an isolated problem. In a recent HR Allies blog, they shared that 10–30% of organizations may be misclassifying workers as independent contractors. Even a small internal mistake can ripple outward, affecting client trust and public perception.
Contractor vs. Employee: Key Considerations
The line between contractors and employees is less about titles and more about structure. Key areas to review include:
Control over deliverables: Are workers integrated into daily operations or just contributors with defined project scopes?
Commitment: Are contractors free to take other work, or do they function like full-time employees?
Documentation: Policies, contracts, and files should clearly reflect the arrangement.
For a deeper dive on the differences between the two and what that could mean for your company, check here.
Misclassification as a Brand Risk
Employees and contractors play a key role in your brand’s reputation, and missteps in classification or management can quickly create public challenges.
“Protecting your brand means periodically auditing your 1099 relationships, especially long-term or client-facing roles, and making sure your classifications still match reality. Getting clarity early is far easier than defending decisions after a complaint.”
- Danielle Verderosa, Founder, HR Allies
Without proper policies and systems, internal HR issues can quickly become external problems. Aligning HR practices with brand strategy ensures that operational missteps don’t harm reputation.
How HR Allies and TGL Work Together
Digital marketing agencies need to think about internal and external reputation together. Proper HR systems protect the business internally (HR Allies), while strategic communication protects the brand externally (The Good Lemon).
“Together, The Good Lemon and HR Allies give clients both sides of the coin, external reputation management with the public and internal reputation management with the employees.”
By aligning HR processes with brand strategy, agencies reduce risk while building confidence and clarity for leadership.
Getting Ahead of Risk Before Crisis Mode
Proactive audits and defensible decisions are key to preventing costly mistakes and protecting both people and brand.
“By the time misclassification becomes urgent, it’s already expensive. It’s far easier to course-correct proactively than to defend decisions once someone else starts asking questions.”
When agencies act early, they gain control of the narrative before a small HR oversight has the chance to become a public problem. If you want to work more ethically and keep your agency running by the book, Marketing by the Book: A Rule Follower’s Guide to Marketing is packed with free resources to help you stay organized and compliant.
Contractor vs. employee misclassification may feel like an operational issue, but it carries real consequences for brand perception and can threaten causing long-term risks. By combining HR expertise with strategic brand protection, agencies can prevent small oversights from snowballing into major problems. In the world of digital marketing, where people and brand reputation are deeply intertwined, this proactive approach is one of the smartest moves a leadership team can make.