• ~PmG

Which is more secure: Full Time Employment or Contract to Hire?

The age old conversation around job security stems from the stigma that different employment types, have more or less job security than others. The truth is, COVID 19 has shown us all that NOTHING is stable and everything, given time, can and will be shaken. I'd like to spend a few moments looking at the different employment statuses and talk about the pros and cons. Before we get started, I will note that I don't endorse or recommend one path over the other. I will certainly share my experience, but at the end of the day, you will need to decide what makes sense for you personally.


Okay, so WHAT is the employment status and why does it matter? Great question. You're asked about it pretty much every where you can think of. Credit applications, apartment, school, signing up for grocery discount cards..this question is everywhere. It's the legal status of a working individual and determines an individuals relationship with the employer. I'll also add this disclaimer and note that this is NOT a lesson on the Department of Labor and is in no way intended to be a guide for anything other than the purpose of this post. This is NOT intended to be used to justify employee rights with your employer, past, present or future or try to use it for litigation or arbitration. I had to say it, just in case someone tries it. STOP!!!

Now, let's get into it. So like I was saying, your employment status, helps to determine your employee relationship or benefits. Keep in mind, my point behind this is to talk about the job security differences...or at least why people tend to believe that one status provides more security over another. There are 3 main status types: 1. Employed 2. Contract/Contract to Hire or Temporary 3. Self Employed. The first two determine your relationship with the organization that "employs" you, but neither actually guarantees anything indefinitely. The last is your personal business in which you control your own employment. I want to focus on types 1 and 2.

  1. Employed - this is someone directly hired to work in a specific capacity, to an organization or company. They are referred to an Employee. There are two types of employees - Exempt (can't get overtime) and Non-Exempt (overtime eligible). In addition, employees fall under a "sub" classification, Full Time Employee (FTE), Part Time (PT) or Seasonal/Temporary. Usually in this process, you apply for a job, get an interview, receive an offer letter. After you accept the offer, you get a benefits package (if benefits are included); that includes your health and retirement benefits and any applicable perks of the company. Unless otherwise specified in your employment agreement (usually in your offer letter), you agree to the salary or hourly rate of pay, start date, functional job title and corporate title if it applies and any additional benefits like how much vacation you have, stock options etc. The other information in your offer letter would be where to report on day 1, when to show up, any training you need to take and what to provide HR before you start. Unless you agreed to work for a set duration, your offer letter only agrees to hire you under these conditions. You have no agreement or commitment from the company to maintain your employment for any reason and your hiring is strictly conditional. While this detail won't be in your offer letter, it will be referenced several times over, in your employee handbook and company new hire/day1 information.

  2. Contractor or Contract to Hire (Temporary) - I've heard contract work also referred to as contract to hire and Temporary. The reason it's called temporary is probably because most contract work, is temporary and for a very specific (documented) amount of time. Contract workers, are employed by an agency, not the "Client" or larger company. They won't have the same benefits available to them as the company and in most cases (but not all), they are hourly workers. Because they are contract workers, they tend to not be aligned to one particular job at a time. Contract workers have the option to stay in a particular role for the duration of the contract, or if it is not a good fit, they may choose to be placed on a different assignment. Depending on how they work, contract workers can work multiple contracts or have multiple clients at one time. Contract workers get a "version" of the offer letter. Because they are aligned to an agency and are not a direct hire, the agency will tell them when to report to the client, how to bill their time and submit a timecard. They don't benefit from the company's benefits, perks or amenities. They are contracted to perform a specific task. When the task is complete, they are no longer required and their contract ends. Depending on the contract, it can be renewed or extended for a new period of time or an offer of employment can be extended to the contract worker. If this happens, the contract worker has the opportunity to become "employed" by the Company.

Let's dig a little deeper. I should also point out that when I refer to contract/contract to hire, I'm doing so in the context of Staffing Agencies or Managed Resources. Managed Resources are usually consultants or contractors on assignment from one of those agencies. In this vein, contractors are "assigned or placed" on an "assignment".












This simply means that a company hired one of the agencies to provide them with workers to do a certain job, for a certain amount of time. So the Company (the assignment/client), contacts the Staffing Agency to assign a Contractor/Managed Resource (employee) to work on a project or do a job (the contract) for a set time.







The point of all this is, if you really understand the details between the two employment statuses, the only one that somewhat guarantees stability, is the contract worker and NOT the employee. Again, I'm in no way suggesting that one is better or worse, I'm just providing information so you can make informed decisions moving forward. Companies will not mince words about how much or how little job security you have. Most companies will tell you several different ways, on different platforms, starting at the time of the application, that your employment is not guaranteed. Your employment can and will be terminated for a defined list of reasons and for no reason at all, except that it benefits the overall health of the company. Don't get me wrong, the contract worker has the same instability issues, but in a different way. While the contract worker can have the same experience with their agency, it's less likely. A contract worker would be more impacted by the contract losing funding (the Company can no longer afford the extra resources aka can't afford to pay), or they just don't like the contract assignment. In either of those cases, the contract worker might be eligible to be "placed" on a different assignment by their agency.


Again, the intention behind this post, was to bring some perspective on the question: Which is more secure: FTE or Contract to Hire? The truth is, while neither provide any true guarantees, only the contracted assignment defines a set employment duration. Traditional employment doesn't afford you the ability to forecast your employment outlook with the same level of scrutiny as the contract employment option. Truly, how you define your employment path is completely up to you. This post shouldn't influence that decision either way, but my hope is that it will inform you, specifically as you navigate employment options during COVID-19. I don't want anyone to pass up on an opportunity because they don't have a clear understanding about the options, or are making a decision based on bad, incorrect or poor information. I encourage you to be open to various opportunities. Especially if you find yourself unemployed as a result of the pandemic. There are employment options out there, but the stigma of job security, or the lack thereof, keeps people blind to options to get back to work. I challenge you to cast your net a bit wider next time, and consider non traditional employment opportunities when factoring your next move. You have permission!!


As always, these are absolutely my thoughts...

~ratedpg


*Disclaimer - The thoughts contained in these posts are my own. The advice and tips shared are based on my experience as a working professional, things I've learned in my own career. As a certified career coach, I do share this knowledge with my clients. I do not guarantee any particular results, as results and experiences will vary. Some of my blog content is for entertainment purposes only. Nothing in my blog is intended to be used to diagnose or treat any emotional, mental, or medical condition. For that, please see the appropriate professional. For additional information, please refer to the Terms of this site.

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