Weigh a Contract Offer Carefully

As business and industry are experiencing increased volume and sales levels, more companies need to add people to support the additional work. However, many companies are responding by hiring contract resources instead of adding employees to their payrolls. This can be an effective way for employers to manage to the ebb and flow of business demands while, in most cases, delivering cost savings.

If you’re considering a contract offer, what are some things you should consider before you accept?

Know the Terms of Your Contract 
First, know who is responsible for managing the contract and your compensation. For example, contract positions are often filled through contract or temp agencies, not the employer.

Make sure you understand the specifics of your contract:  
What is your compensation? Will you be paid hourly or a flat project fee? If hourly, will you be paid for overtime?  What is the length of your contract and is there an end date? Will you or the agency be responsible for paying for your federal and state income taxes?

Potential Impact on Other Income Sources
Taking a contract position may impact your current or potential income sources. For example, if you’re receiving unemployment benefits, be sure to research your state’s benefits eligibility guidelines and earnings caps. Similarly, if you are receiving severance pay from a previous employer, determine whether accepting a contract job precludes you from continuing to receive severance pay. For the answer, read any documentation details you received from your previous employer or contact the company’s HR department.

Additionally, if you are mainly interested in securing a full-time, on-staff position, accepting a contract position temporarily impacts your availability to accept a staff position. In addition, it precludes you from dedicating much time, if any, to a continued job search.

A contract job can be rewarding and may even lead to an on-staff position, but before you accept a contract, understand all the details of the contract and how they impact you.

Working on a Trial Basis

Wouldn’t it be nice if you could simply try a job, without making a long-term commitment, or just take a test run to evaluate whether the work and company culture are a good fit. If you’re intrigued by these ideas, you might be a good candidate for an alternative work arrangement like one of the following:

Contract Work
Many companies look for contract workers who have specialized skills or experience to support a specific project or increase in business. Contractors work for a specified length of time—from several months to even a year or longer. Many successful contract workers function independently, contracting for and billing their services directly to the company. Others work through a temporary (i.e., temp) agency or a staffing firm that manages placements and contract arrangement details.

Temporary Work
Temp or staffing agencies also place temp workers, typically to compensate for a short-term employee absence or to support a project or a business spike. These assignments may last from several weeks to several months, but unlike contract work, they don’t typically require specialized expertise.

Consulting
Consulting is similar to independent contracting work in that a consultant usually has specialized knowledge or expertise. However, consultants are different in what and how they deliver that knowledge/expertise. A contract worker may contract to work for a set period of time performing a particular job function—for example, graphic design work. On the other hand, a consultant would more typically focus on helping a client get up to speed in a particular business methodology, process or industry standards—for example meeting new industry quality guidelines.

Internship
An internship is a great way to gain work experience while exploring a company and/or an occupation of interest. These are often geared toward college or university students in exchange for college credits. Internships are also popular among those looking to change careers or re-enter the job market.

More Companies Using Independent Contractors

As the U.S. economy starts to make a slow recovery, companies using independent contractors are on the rise. Independent contractors (also referred to as temporary, supplemental, and freelance workers) enable companies to manage increased work levels—typically in the form of short-term assignments—without investing in permanent employees. Since employers do not provide healthcare and don’t have to pay social security and unemployment insurance taxes for independent contractors, these companies realize some significant cost advantages.

Working Directly with the Company or through an Employment Agency

Independent contractors can be self-employed and hired directly by the employer, or they can work through a contract employment agency. These agencies are compensated by the companies that hire them to find qualified workers for performing specific tasks and/or completing short-term assignments. Independent contractors can derive certain advantages from working with an agency. For example, they can benefit from the variety and number of potential work opportunities that agencies have with companies across industries. Additionally, agencies often manage payment arrangements, provide job preparation services, and may even offer some benefit options.

Pros and Cons

Before you decide whether working as an independent contractor is right for you, consider a few of the most common pros and cons:

Pros:

· Increased flexibility—you choose which temporary job assignments to take and may have some control over specific work arrangements

· Exposure to a variety of industries and experiences

· Opportunities to develop new skills

· Expanded networking prospects

Cons:

· Unpredictable, fluctuating income

· Lapses between work assignments

· No employee-provided benefits, unemployment insurance, and worker’s compensation

· A perception that you are not part of the team, resulting in possible exclusion from certain company privileges and information