Taking an IT job as a "contractor" - what do I need to know?

In My Humble Opinion
1

I put contractor in quotes because I’m not even sure that’s the word I want to use here. I’m talking about getting a job - let’s say in a local government agency, department of head honchos - by way of a third party hiring firm.

In the normal course of doing business with some of my clients, I’ve made a few friends. Recently, one of them found out that I was considering a job change and so she asked me for my resume. I had no idea what position she had me pinned for, so I couldn’t tailor the resume to aim it at the position. I just sent her my generic resume.

Well she rolls it up and sticks it into a proverbial pneumantic tube and sends it up the chain of command to some director and takcs on a sticky note that says “we want this guy!”

Gulp.

The very next day I get a call from a nice lady asking me general questions about salary range, why I’m thinking about leaving a fortune-50 company, etc. I breeze through that call and she informs me I’ll next be hearing from the head honchos themselves. Sure enough I get a call the next morning from two guys on a speakerphone. We hash through my experience and talk about this and that and it’s determined by the end of the 45 minute call that I seem like a good fit for the job.

When I get home, I have an e-mail from the nice lady. She’s not with the department of head honchos. She’s with this firm.

Oh, um… fine I guess. I’ll be working for NFFinc but they will “place me” with the office of the head honchos - right?

Why doesn’t the office of head honchos just hire me directly? Do companies use agencies like NFFinc to avoid having to keep a large HR department on hand?

I was told that this is not a project, it’s a permenant position in a newly created office with the department of head honchos. So it’s not like I’ll be hired for a project that will end in six months or a year and I’ll be looking for a job again.

I told one of my close personal friends about the opportunity and he said it sounded great until I mentioned the part where I was being placed by a third party. He made a grapefruit face. Oh, a contractor? Nah, forget that! When I probed him for his specific reasons, he couldn’t give me anything that made sense.

"It’s a contractor job. You’ll just be a contractor (said with a frown).

Oh, I see. And the problem with that is… what?

“It’s just a contractor position!”

And so on, and so on.

So I reach out to my doper friends. Tell me what I need to be worried about, if anything. Any special questions I need to ask? If the department of head honchos decided to revamp or close the office six months down the road, am I still employed with NFFinc and it’s up to them to place me somewhere else?

2

The specific arrangement depends on the contracting firm; some hire their staff as regular full-time employees and pimp them out to their clients, whereas others just place contractors in a position and take a cut of the pay. The reason that some places use contracting or temp firms is as you suspect – they don’t want to do the HR work themselves and are probably not qualified to judge a candidate for a technical position. Be sure you get as much information as you can from the third party. Ask if they’ll be hiring you as a full-time (W2) worker or not, if they offer benefits, etc.

The drawbacks of being a consultant or contractor is that you’re not an employee. You don’t get employee benefits, your taxes aren’t withheld so you have to file quarterly returns, and you’re paid strictly by the hour instead of receiving a salary.

On the other hand, since you’re a sexy freelance contractor, neither do you necessarily have to obey all the employee rules. You can show up when you want, do your work, bill your hours, and leave. Of course, the specific conditions in your contract may dictate working hours, and so forth. There’s a lot of latitude.

3

I’m in too bad of a mood to coherently read your OP right now. Sorry! But I can say this:

In the legal sense, COVER YOUR ASS!

If it means dropping a few hundred bucks on a consultation with an attorney expert in the subject, then do it anyway.

I work in local government, which is quite different from what you’re talking about, but I’ve seen so many people get screwed because they weren’t legally covered.

I’ve done a moonlighting project as an expert witness doing statistics, and I basically said, “Hell if I know what you should pay me, wait until it’s over and pay me what it was worth.” That worked because I work closely with the attorney at hand (he’s my township’s general counsel.) But, more than one of the other expert witnesses in the suit emphasized in no uncertain terms that I needed to make sure I had proper legal contracts and so on. I think that was wise advice, and if I get other jobs, that’s something I’ll pursue (sp?).

So, that’s what I’ve got to offer. Take the time & money to consult w/ a legal expert who knows about being a consultant/contractor and ensure you’ve got good legal footing. E.g., maybe you need to creat a LLC, so that you don’t lose your home over something stupid.

Otherwise, best wishes! Good luck!

4

When you contract ,you have 2 jobs.The one your doing and the oneyou are looking and applying for on the side.
Lots of contract jobs are long term and can turn permanent.The reason they contract is they are not responsible for benefits and if they need to cut staff ,they dont have to do the dirty work. A phone call and you are gone.
In my experience the benefits in contracting agencies often meet or exceed general business stds.
The people around you dont love you. Contractors are taking permanent jobs away. At least they think so.

5

Part of it to change your mindset. No jobs are permanent anymore. Companies owe you nothing and will act that way. You are there to do your job as well as you can. Learn all you can but statistics say you will have at least 7 jobs in your career.

6

I am an IT contractor at the moment although my current client is about to hire me in the next few days. It is a perfectly legitimate line of work and there are many such agencies and thousands of us contracting in the Boston area.

It does have some perks. Your hourly rate should ideally be higher than your equivalent salary for the position to compensate you for benefits, vacation, etc. If you don’t know how to translate an hourly rate into salary, it is roughly two times the salary times times 100 (e’g. $40 an hour equals $80,000 a year). You want that number to be 20 - 30% higher than the salary rate.

There are different ways of being a contractor: W2 and 1099. If you go W2 like I always have, it basically means that the agency is your employer and takes care of taxes, payroll, and the other details. There is very little difference in this arrangement from being an employee. Your paycheck just comes from a different place. 1099 contractors probably make more an hour but there are quarterly taxes and other inconveinces associated with it.

Many contractors are long-term with the client. I have known many in the 5+ year range at the same place and some over 10 years. In some places, they were the most senior “employees”. Advantages to contracting should be somewhat higher pay and I always sense a little more respect because you are seen as an outside authority. In theory, you also have as much vacation time as you can arrange because you don’t get paid but that depends on the client’s needs. There is only a small difference in most places however. Disadvantages include an almost complete lack of benefits and your agency will probably do very little other than generate checks once you start. Contractors are sometimes barred from some company, presentations, and literature even though it seems rather pointless when you have the keys to all of their data anyway.

I like being a contractor and many contractors stay contractors at a client even if the client offers to convert them. The pay can be better and the lack of benefits may not be bad if you have a working spouse with benefits.

7

You also asked if you are still employed by the agency if the original gig falls through. Not really but sort of. You get paid by the hour so the second your assignment ends, the pay stops. Now most agencies will try to find a another position for you but this is much like finding and getting any other job. They probably won’t try all that hard. I switched agencies just because my old one couldn’t locate an appropriate job even though they liked me and tried. My current one found me one. I have spoken with my current agency for less than 15 minutes total in my 8 months with them. 12 of those minutes were when I had to stop by their office for the first time and sign things before I interviewed with the client and the other 3 were messages to sort out conversion details. Their name is on my paycheck but that is about it.

There is nothing wrong with contracting as long as you think of the right way. Oddly, the seemingly transient nature of the jobs makes it likely that contractors make be kept as regular employees get laid off. They figure that contractors can be dealt with at any time while employees are messy and must be dealt with dramatically. That has happened in two companies I have worked for. The contractors just plugged the dike while they laid employees off.