Also, factors which are relevant in one situation may not be relevant in another. If an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the minimum hourly wage, the employer must make up the difference. Also, employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement.

full time vs contract which one to pursue

While indefinite contracts offer a host of benefits, there are also some challenges (that could be seen as potential disadvantages). These challenges are more evident for employers than they are for employees. Before an individual can begin working for a company, it is imperative both they and their employer agree to a written document summarizing the main terms of employment. This agreement — otherwise known as an employment contract — is a legally binding document that sets out an employee’s rights, responsibilities, and remuneration.

What is the difference between a fixed-term contract and an indefinite contract?

Working on temporary contracts allow employees to take on a greater variety of projects, work in different places, meet a variety of people and expand their skill-set. The IRS will review the facts and circumstances and officially determine the worker’s status. The FLSA allows the Department of Labor (“Department”) or an employee to recover back wages and an equal amount in liquidated damages where minimum wage and overtime violations exist.

Your staffing agency or employer of record will handle your payroll taxes, thereby “increasing” your earnings in the long run compared to 1099 employees. Federal laws don’t regulate what constitutes a full-time vs. part-time employee, with the exception of the ACA. Under the ACA, employers are required to offer health insurance coverage to full-time employees, defined as those who work at least 30 hours a week or 130 hours a month. Some states, counties and municipalities set stricter laws defining part-time vs. full-time employment and regulate greater employer responsibilities. Furthermore, independent contractors are personally responsible for handling tax liabilities, healthcare benefits, insurance, and marketing expenses.

What Are The Benefits of a Contract Job?

Starting with the most obvious pro, with a full-time position, you are guaranteed work from the company. There’s no need to constantly seek out new projects as contracts contract position vs full time 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.

full time vs contract which one to pursue

Think of a contract-to-hire job as an extended job interview (but with pay!). It can be hard to tell if a candidate is as capable as they claim to be during an interview. Because making the wrong hiring decision can be costly, employers want to make sure they know what they’re getting in an employee. FlexJobs is a subscription service for job seekers that features flexible and remote jobs. With an A+ rating from the Better Business Bureau, the monthly subscription costs allow us to fully vet and verify all of the jobs on our site—ensuring that customers have a safe and positive job searching experience.

Reasons Why You Should Take A Contract Job (

A part-time employee is usually someone who works for your business on an hourly basis less than a defined number of hours. As the employer, you might set that cutoff at 32 hours, 40 hours or something else, depending on what makes sense for your business. If your business needs to hire employees in foreign markets, Horizons’ global PEO supports you to recruit, onboard, and draft indefinite contracts for employees. With our entities in 180 countries, we ensure you maintain legal and tax compliance, all while connecting your business with the world’s best talent. Firstly, an employer is not required to apply for a dismissal, which means they do not need to take into account relevant notice periods and notice prohibitions (unless a premature termination is involved).

  • Here are some factors to consider when deciding which type of worker is right for your team.
  • While employers have some wiggle room, there are specific labor laws that determine how businesses classify employees.
  • In addition, with a contract employee, you typically don’t have to offer other benefits.
  • A contractor – also called a contract worker, independent contractor or freelancer – is a self-employed worker who operates independently on a contract basis.
  • Whether your employees are part-time or full-time, you need to help them feel valued, invested, and successful if you want your business to succeed.
  • As the title suggests, full-time software engineers are permanent employees a company hires at a definite rate to work for a set number of hours every week.
  • Special provisions apply to workers in American Samoa and the Commonwealth of the Northern Mariana Islands.

These factors tend to make indefinite contracts more attractive for employees and employers. An employer will usually set the hours of a full-time employee and the employee will report to a supervisor within the company. These employees have guaranteed work, meaning they have a more stable income than part-time workers and contractors. Their compensation at entry level varies but they are eligible for raises and are paid on a schedule rather than only after completing projects. Full-time employees are also promised benefits like health insurance and can fully utilize the company’s equipment or software to efficiently complete projects instead of relying on their personal technology.


While the type of contract can vary depending on myriad factors, the most common type of employment agreement is an indefinite contract. Offers of employment come at the end of the recruitment process, can be conditional or unconditional, and lay out only the basic terms of employment. Working as a W-2 employee the staffing agency pays you an hourly rate, takes out your taxes and you should be eligible for unemployment benefits when the assignment ends.

  • In other words, even if you don’t have 50 full-time employees, you might still be considered an ALE if all your employees’ work hours add up to the equivalent of 50 full-time workers’ hours.
  • Additionally, the IR35 legislation which is coming into effect in April 2021 has implications for temporary employment – we will explain the implications of IR35 for your business in more detail further in this report.
  • This can range from a few months to a year, sometimes more, depending on the project requirement and mutual interests.
  • Contract-to-hire workers can give companies the time that they need to budget for a new employee in a few weeks or months while still maintaining productivity.
  • For example, the Affordable Care Act (ACA) requires that employees who work 30 hours per week (or over 130 hours per month) must be given the option to receive health insurance benefits, or the business may risk fines.