Tell me about contract employment, please.
November 7, 2012 11:55 PM   Subscribe

I applied for a contract position for a local city government. I don't know what a contract position entails, and I have a few questions for anyone with experience as a contract worker (or hiring contract workers) for city jobs.

The rate of pay on the posting says $40,000 and no benefits. It is my dream job, but the pay is a but lower than what I have made in the past. And, with this "no benefits" business, it makes the pay seem even lower. My gut tells me that there is no room for negotiation because it is a public job, and even more so because it is a contract job. If you have experience with this, can you let me know how weird I would be to try and negotiate a higher salary or benefits?

Also, do contract workers typically work a 40-hour week? Or is it more like, "These are your assignments. Get them done by this deadline." with no regard to how much time it takes? In other words, could I potentially work less or work more than a 40 hour week and still get paid the same amount? If no, do contract workers get paid overtime?

What are the pros of being a contract employee over a regular employee, other than if you leave the job you can tell future interviewers that your reason for leaving was because it was a contracted position?
posted by foxinthesnow to Work & Money (5 answers total) 1 user marked this as a favorite
The thing about contract workers is that they work under a contract, so a lot of these questions can only be answered by reading the contract. In addition to being unavailable to us, that would constitute legal advice and thus be inappropriate for this forum.

But generally speaking, "contract workers" aren't the same as "independent contractors." The former are basically temporary employees who fill an internal role at the employer for a fixed period of time, while the latter are outside people hired to do a specific task that the employer does not generally have its own people do. As such, contract workers are frequently indistinguishable from regular employees with the sole exception that the former have a sell-by date.

My gut tells me that there is no room for negotiation because it is a public job, and even more so because it is a contract job.

That may or may not be the case. It does seem pretty likely though. Salaries for public employees are generally the result of either collective bargaining or legislative fiat, or both, so there isn't necessarily a ton of room to push things around. In the federal hiring process, managers may have the discretion to push new hires a few steps up the GS scale but are unlikely to be able to give you a grade bump, which is where the real money comes in. Local employees may work a bit differently, but if you're hoping for more than a 3-5% bump you can probably kiss it goodbye.

do contract workers typically work a 40-hour week

Frequently. Again, contract workers are basically just temporary employees that the employer is hiring without paying a temp agency. So:

could I potentially work less or work more than a 40 hour week and still get paid the same amount?

Impossible to say. Depends both on the type of job and the contract terms.

do contract workers get paid overtime?

This has less to do with whether you're a contract worker than whether you're an exempt, salaried employee. Contract workers can be either wage employees or salary employees. The former are entitled to overtime. The latter are generally not.

What are the pros of being a contract employee over a regular employee

Generally speaking, there aren't any. You have all the requirements of a regular employee, it's just that you aren't going to be there forever and everyone knows it. But all the HR bits that go with being a regular employee generally apply to contract employees.
posted by valkyryn at 3:08 AM on November 8, 2012

Basically- some third party company is skimming some of your pay package under the guise or making you easier to fire or lay off when finding runs out. Sorry, but that's the deal. Apply anyway and take these questions to the interview, they're used to itl You should be able to work out some kind of deal with the contracting company if they hire you.
posted by fshgrl at 3:55 AM on November 8, 2012

And that 3rd party company is who you'd be working for, not the city. As others have said, impossible to know what kind of wiggle room there might be, but usually the contractor has some fixed cost agreed to with the city, so you'd have to convince them that you can do something better and different that will save them (the contractor). For example, if they're currently providing 2 people and you think you can be so efficient that they won't need the other person.

However, my brother works for a major government contractor (as in, the private company provides an entire department of the government bureaucracy), and the government sometimes mandates certain positions. So if the city is contracting with the company specifically to provide 2 people, they can't substitute 1 person, even if he or she can, for example, code 3 times as fast.
posted by randomkeystrike at 5:07 AM on November 8, 2012

Agreeing with valkyrn that all of this and more is answered in the contract itself. If you are a W2 contractor, usually you are paid by the hour and probably they just annualized the pay in the job listing (so, it's 19.23/hour assuming you work 40 hours/week every single week). Whoever it is that cuts your checks will also pay half your FICA. This is not unlike a temp job, except it can go on forever. Sometimes these are basically temp-to-perm where you two try each other out for a set period of time and then make a decision after that time about whether it's a good fit. If it's temp-to-perm, don't necessarily count on being converted to an employee -- sometimes they just keep renewing your contract because it's easy and cheaper. I cannot imagine a situation where you could work less than 40 hours a week and still draw the same pay. I've never seen one of these work like a salary. Sick time, vacation time, a slow week -- these lower your check.

If you are an I-9 contractor, you can sometimes get contracts where you are paid for the full job and not by the hour -- but I do not recommend this unless you are very comfortable with this type of work and contract, because you could underestimate the amount of time it takes to get the work done. As an I-9 contractor, an agency may payroll you for a small percentage per hour. This means that you submit invoices to the agency, and they roll them into one invoice which they enter into the client's system, and they pay you when they get paid. You'd be responsible for both halves of FICA (the full 15%), and you pay estimated federal taxes quarterly. The IRS has rules about what must be happening for you to be an I-9 contractor (like, you use your own equipment and you don't clock in and out and sit in the client's location, and you are responsible for your company's profit and loss).

In either case, you can by an individual insurance policy. These can be pricey, especially depending on what you want. If you take a huge deductible and you only want major medical (so, not covering doctor visits or ongoing prescription drugs), it can be more affordable, but you must have enough money set aside to assume that level of financial risk. For example, I can get one with a $10,000 deductible and 50% coinsurance at $3500 for $208/month -- but you see that the risk is if you get seriously ill or injured you need more than $10,000 to cover your end.

In both cases, if you are working through an agency there may be room for negotiation with them. The client is paying more than what you get, so there's that part. The tricky thing is figuring out how much that is. If an agency is payrolling you, you can ask what the percentage is and try to work it down. If an agency is your W2 employer, they are extremely unlikely to tell you their cut -- and if they tell you, it may not be true.

Sometimes it works to your advantage to be a contractor instead of an employee:
- When the pay is really good.
- When the employees work huge numbers of hours overtime, which you get paid for (straight time, not time and a half).
- When you have nothing else on the table, and it pays the bills while you continue to look for something better.
posted by Houstonian at 5:40 AM on November 8, 2012

Basically- some third party company is skimming some of your pay package under the guise or making you easier to fire or lay off when finding runs out. Sorry, but that's the deal.

That may be the case, but is not necessarily the case, and is not likely the case if what you describe is how things are. I work for a city government, and we hire contract employees for all kinds of things, and we hire them directly. We also have contracts with other companies who provide workers for certain projects, but those workers are contract employees of that company and not of the city. Basically, a contract employee in my city is exactly like a normal employee, but hired for a limited time and paid through a different mechanism. This can be because the money to hire them is actually coming from another entity (like a grant from the Feds), or because there is no room for more permanent employees on the personnel schedule, but there is work that needs to be done. There are contracting mechanisms in place, the same mechanisms that would allow us to hire a copier repair company, or purchase computer equipment, that would allow us to pay someone for work without calling them officially an employee. Those mechanisms would not allow us to

So, you need to read the contract, but my guess is that this is a regular job, for a set time period, for which you might be able to negotiate within a limited salary range, but not for benefits. I'm basing my guess on my work for a couple of different municipal governments and my knowledge of the language common to describing these types of arrangements there.
posted by OmieWise at 6:13 AM on November 8, 2012 [1 favorite]

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