Moving from regular employee to contractor
May 28, 2010 2:49 PM Subscribe
The short: I've been laid off, but the company wants me to come back as a contractor to finish up a few projects. And I want to finish them.
How much money do I ask for as a contractor?
Of course, the details are inside.
posted by anonymous to Work & Money (17 answers total) 5 users marked this as a favorite
I've been laid off. Mostly.
I've been here for just over nine years. The company has been struggling for quite a while, and was purchased a year ago. The new owner has put into place a firm headcount limit. While it's unrealistic for our current needs, the line in the sand has been drawn and none of the senior execs dare cross it. So, the workaround consists of laying people off and then bringing them back as contractors, since they then do not count against the headcount limit.
This certainly isn't a wise long-term strategy for anyone, but it is the position I now find myself in. I've been laid off (the layoff date is a week or three in the future), and offered a position as a contractor.
How do I know a fair rate to ask for as a contractor?
-Let's say my salary is about 55K.
-My paycheck (every two weeks) lists my "rate" as $2070, I usually see about $1460 +/- $5 as takehome pay on a paycheck.
-I'm in Portland, Oregon
-I have excellent health benefits that cover myself and my wife (who does not currently have the option for health insurance through her employer).
-This is likely a temporary contract (1-3 months)
-I'm losing about four weeks of vacation/sick time (we combine it all and call it PTO) in the layoff, this is not included in my otherwise very generous severance package, which does include four months worth of COBRA payments.
-I have two options as a contractor. Invoice the company myself and stay fully independent (and then have to deal with taxes, etc.), or work through an agency that takes care of all the withholding, etc. I think I prefer the agency route for the sake of simplicity and the possibility of other jobs in the future.
-my contract will likely be an hourly rate, not a salary.
-I think my current rate, if broken down to hourly, (and assuming I only work 40 hours a week... Ha!) looks to be $26ish.
What do I ask for; $30, $35, $40, $45, $50 - more?
Is there a good formula or rule of thumb that I'm missing?
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