Contract vs. Direct Hire

What does it mean to work for a company as a “contractor”?

Most contractors usually work through a staffing agency. Companies (clients) employ staffing agencies to source workers when they don’t want to, or can’t, put a new employee on their payroll. Instead, the contractor becomes an employee of the staffing agency, but works for the client, doing the work the client needs them to do.

Working for a client through a staffing agency offers the opportunity to get your foot in the door, where it might be more difficult to get hired as a full-time employee.

What is expected of a Contractor?

• As a self-employed contractor, you are responsible for figuring out taxes to be paid and obtaining health insurance.
• As an employee of a staffing agency, you will receive a scheduled payroll check with taxes withheld.  You may also be eligible for a benefits package.  Look for a staffing agency with benefit packages that include, health, vision and dental insurance, Paid Time Off options and a retirement plan.
• As a contractor assigned to work for a client, you will take direction from them about the specific work they need you to do.
• As an employee of a staffing agency, you should keep in regular touch with your recruiter. If you have any issues with the job or tasks the client assigns you, notify your recruiter as well as the person you report to at the client. Your recruiter can help address any issues that may arise.
• As a contractor, the client expects you to perform like one of their regular employees. Show up at your scheduled work time, let them know when you are too ill to work, and adhere to their work rules. Depending on your role, you may be asked to attend their internal meetings, keep track of the time you spend on a project, complete one of their time sheets, and use their computer and software. Sometimes they may ask that you supply your own equipment to work on.
• As an employee of a staffing agency, you’re expected to let them know when you are too ill to go to work, need to take personal time off, or have a vacation planned. The staffing agency will have you complete their time sheet.  They won’t tell you that you can or cannot take the time off; however, if their client can’t spare you, it may come to a choice between the time off or continuing the assignment. If you have any vacations scheduled, tell the staffing recruiter right away!
• As a contractor, the project or assignment with the client can come to an end.  It may also get extended for up to two years. When it comes to an end, your recruiter will work with you to find a new assignment.
• As an employee of a staffing agency, when your assignment ends you are eligible to file an unemployment claim. However, in most states, to collect unemployment benefits, you must prove you are trying to find another job. You can satisfy that requirement by keeping in touch with your recruiter and letting them know you are available for a new assignment.

Shouldn’t the focus be on finding a “permanent” job?

• Not necessarily. A job is a job. As a staffing agency employee, you can also enjoy longevity of employment even though you may work with several different clients for various periods of time. This allows for career advancement, without looking like a “job hopper”.
• Most individuals think there is more security with a permanent position. However full-time jobs can also come to an abrupt end; whether by poor performance, a furlough or lay off.

What is expected of the Staffing Agency?

• The Staffing Agency represents you. They may ask you to sign a Non-Disclosure Agreement.  Which gives them the right to share your information with clients.  It also advises you to not share client’s information or to contact the client directly.
• The recruiter will help you with your resume. They are familiar with the client and what skills and experiences they are looking for.
• The Staffing Agency has a relationship with the client’s Hiring Manager. They can negotiate the best compensation rates.
• The Staffing Agency will pay your employment taxes and provide you with an annual W-2.

The bottom line is, working as a full-time employee of a staffing agency is really no different that working a direct hire, full time job. Both offer benefit packages. Both take care of payroll and the W-2. Both offer stability. Don’t be afraid to work with a staffing agency should the opportunity arise.

** Some information taken from Judi Wunderlich, What’s it Like Working as a Contractor Thru a Staffing Agency? May 7, 2015 Linkedin Pulse article