Culturally in the United States, we imagine a full-time employee as someone who works around 40 hours a week. But that classification isn’t federally regulated in most cases, with the exception of the Affordable Care Act (ACA). In this guide, we’ll explain everything you need to know about the difference between full-time and part-time employees and what the classifications mean for you as an employer. And, of course, what happens if you’re offered a full-time, permanent role at another company?

Without a written agreement, there is no “proof” that anything you were told was actually promised. Plus, if you make a good impression on your employer (but they’re unable to offer you a full-time role), you can always ask for a reference, recommendation, or referral for another job. But don’t confuse a contract-to-hire position with an independent contractor position. If you work on a 1099 basis you are responsible for paying your own taxes when tax season arrives.

What are independent contractors and employees?

While scrolling through job listings, you see several contract roles with high hourly rates, flexible hours and exciting projects. Should you become an independent contractor as opposed to a full-time employee? Experts weigh in regarding the stability of full-time work versus the opportunities and flexibility contract work can bring. A W-2 is a tax form where businesses report annual compensation paid to their employees and the payroll taxes withheld from that compensation. Employees who receive a W-2 are paid through their employer’s payroll and have their payroll taxes withheld throughout the year. You withhold taxes from their wages, train them, pay employment taxes for them, and may provide benefits.

• One of the biggest differences between independent contractors and full-time W2 employees is who pays for all the supplies.
• It’s truly astounding how few business owners properly account for the real cost of their labor.
• Think about what they have in common — like a similar industry or type of role — and list them accordingly.
• A new NPR/Marist poll finds that 1 in 5 jobs in America is held by a worker under contract.
• In the Government contracting domain, the 1.99 figure is roughly the median, with cost multiplier values most typically being in the range of 1.5 to 2.5.
• Whether or not a contract job offers benefits depends on the company or staffing agency you are working for.

If you are an independent contractor and hired by a company or person to perform a service, chances are they will ask you to fill out a W-9 form. You must verify information, including name, address, and tax identification number. All the pages of the W-9 are available on the IRS website, which also provides step-by-step directions on how to fill it out. Independent contractors are not eligible for employer-provided healthcare plans, so they must completely fund their healthcare. They must also pay both the employee and the employer parts of Social Security and Medicare taxes. They are not eligible for employer-sponsored 401(k) plans or matching contributions from those who employ them.

Pros and Benefits of Contract-to-Hire Jobs

Otherwise, they likely won’t accrue the PTO they’re entitled to, and you may owe them back pay or face a lawsuit over unfair practices. The vast majority of job seekers don’t want to be stuck in a job or culture where they’re not a fit. This short-term role provides an employee with a way to test-drive a job (and a company, too) without worrying about being stuck in a position that they don’t like or want. Whether or not a contract job offers benefits depends on the company or staffing agency you are working for.

They can learn about and work in various companies and industries giving them broader insights and knowledge. Additionally, contract projects are likely to use different technologies, platforms, and processes, allowing contractors to learn and apply new skills and continuously add new experiences to their resume. Just as with independent contractors, there are hidden costs that businesses incur as a result of W2 employees. Some of these are a little more obvious because they are actual expenses. However, all will factor into your decision as to whether contract or full-time workers are best for your business. Many businesses, both small and large, have made the mistake of misclassifying employees — and have paid the price in hefty fines, legal fees, retroactive payroll taxes as a result.

vs. W-2 tax rates

If you have a medical condition or require specialized equipment which you don’t already have, financing your health insurance can severely hurt your bottom line. You have to remember that salary is not the only benefit in a full-time job. Having lots of contract jobs is one situation contract position vs full time where it pays to list specific months — not just years — on your resume. Again, if you have a lot of these, it’s best to group them under a single heading, like a staffing agency. Underneath that, you can list each company or position and the exact dates you worked for them.

Like everything else on your resume, contract work needs to emphasize your achievements, not just account for how you’ve been spending your time. Your achievements should be quantifiable, results-oriented, and relevant to the positions you’re applying for. Focus on your ability to deliver results, regardless of the contract’s nature or duration.

Case Study: Why Does the Part Time vs. Full Time Definition Matter?

Because of this, you have more control over your employees — you dictate how and when they work. Under the ACA, so-called applicable large employers (ALEs) are required to offer minimum health insurance coverage to full-time employees, as the IRS explains. Finally, full-time IT employees have the opportunity to develop a deeper understanding of the technology they work with. In contrast to contract employees who have to learn new technologies and platforms on each project, full-time IT workers can become experts in their tech specialty or field.

There’s no need to constantly seek out new projects as contracts end, since you’ll instead be continuing your role with one organization. A reliable job is most attractive to those who crave stability in their work. It’s tough for candidates to decide whether leaving a full-time job for a contract position is right for them.