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Contract Employment Question

1,850 Views | 12 Replies | Last: 7 yr ago by JamesPShelley
beerag04
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AG
I need some help understanding a job offer I just received. I am being offered a one year contract position at a large company. The position also comes with full benefits (medical, 401k, etc., paid vacation). When I interviewed for the position they told me that there is a significant learning curve and it will be six months or more before I have the knowledge of the industry and their processes to really contribute.

Based on the training time and expense and providing full benefits, what is the company's motivation for offering a contract position over a normal at-will employment? From what I could gather, they could only get a contract position approved by the company right now and possibly at the end of the contract they can get approval for a full employment position. However, from my perspective they are not saving anything. They have just guaranteed a date they can get rid of me if the work is not there in a year. I'm probably going to take the position either way because it is such a large increase in pay I can justify the risk of the contract not being extended. I'm just trying to get a better handle on the likely hood of that happening.
Van Buren Boy
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AG
If you're getting all of the benefits of an at will employee, what's the difference? I guess if they keep you around after a year they can use your contract status as a way to delay a bonus or promotion. Not sure what the other downsides would be.
beerag04
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AG
i agree there is no difference while I have the job. I'm just not sure how that structure affects the decision to keep me at the end of the contract period. They did mention I'm not eligible for bonuses during the contract period. Maybe that is a more significant savings than I was thinking.
AgLA06
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AG
quote:
i agree there is no difference while I have the job. I'm just not sure how that structure affects the decision to keep me at the end of the contract period. They did mention I'm not eligible for bonuses during the contract period. Maybe that is a more significant savings than I was thinking.


Don't forget tax / social security implications of being contract.
Comeby!
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AG
And bonus+ LTI's....
brotheraggie
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george92
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quote:
quote:
i agree there is no difference while I have the job. I'm just not sure how that structure affects the decision to keep me at the end of the contract period. They did mention I'm not eligible for bonuses during the contract period. Maybe that is a more significant savings than I was thinking.


Don't forget tax / social security implications of being contract.


It's an employment contract not and independent contractor agreement. He states in his first post that it comes with full benefits.
Ezra Brooks
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AG
Taxes, bonuses/equity have all been mentioned.

Another thing to consider is if the job is truly only needed for short time, they can bring you on for a year and know that you will be gone after that without incurring any exit/severance costs since you have an agreed exit plan.

Also, as stupid as it sounds, some companies closely monitor employee headcount/costs without much concern for the same on the Contract side (which may well have the costs sent to project/capital expenditure or parnters, etc.)
AgLA06
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AG
quote:
quote:
quote:
i agree there is no difference while I have the job. I'm just not sure how that structure affects the decision to keep me at the end of the contract period. They did mention I'm not eligible for bonuses during the contract period. Maybe that is a more significant savings than I was thinking.


Don't forget tax / social security implications of being contract.


It's an employment contract not and independent contractor agreement. He states in his first post that it comes with full benefits.


He didn't say who he was getting the benefits through. Could be a third party company and he'd still be a contractor. I don't know contract details extensively so you could be correct. However, I don't think we would be doing him any justice just to assume.
beerag04
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AG
It is a W2 position so ti is more of a temporary position than a contract position. It would make more sense to me if it was true contract position or if it was a short term need that they felt I could address right away. However, this is a W2 position where, according to them, they will spend 6 months just teaching me the ropes. I find it difficult to believe that they will need me for a short time next year and are willing to invest that much time and money into it.

Honestly, I'm just trying to convince myself that there will be a long term future for me there.
Petrino1
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Companies do things like this all the time especially during slow periods or downturns (current oil bust). Most 3rd party recruiting companies offer full benefits and 401k match to their employees who are working contract at their clients, which is likely the case here.

While it may cost the same or more to the company you're working for to bring you on as a full time employee vs contractor, to them it makes sense to bring you on as a contractor because it is easier to get rid of you in case they dont need you. As an employee if they fire/lay you off, they might have to give you a severance package, pay out your vacation, pay unemployment, plus deal with potential lawsuits for firing/getting rid of you. For contractors working for them they are immune to all of this, the contracting company assumes liability.

Also, its seen as a try before you buy type thing. If they hire you as a full time employee and you suck, well its a pain in the butt to manage you out or fire you. If youre a rockstar as a contractor, then its likely theyll want you to come on as an employee asap.
Square Pair
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AG
Is the company providing government type services? Did they indicate what exactly determines the follow on (I.e. Funding, performance, etc)? I mean I'm confused because you indicate a steep learning curve and 6 months of training leaving 6 months of performance before a possible end date. If they are providing government services, it may be that they are in the final year of the contract period (which would also be your end date) and are hoping for a follow-on contract.
Zemira
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AG
From his responses it seems the company is hiring him, but only for a specified period of 1 year. I would agree a 3rd party contractor would make more sense, but it appears they are hiring directly for only 1 year.
JamesPShelley
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Texas is a Right to Work state. That said... you can be terminated or laid-off anytime.

I find a benefit in the annual contract because it means you're good for a year. Contingent upon the contract terms... they let you go six months in... they still owe you for six months.

The person you work next to... no contract... done is done.

I'd enjoy the contract ride and, two months shy of contract end, start a dialogue for another contract... or regular-Joe, day-to-day, continued employment. In that order.

Companies have no, zero, loyalty to their employees. Their only concern is shareholders. That's to whom they answer.

Just got to keep looking out for Number 1.
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