When a contractor is offered a full-time job

Find out the reasons why a contractor may be offered full-time employment.

A TechRepublic member emailed me to get my opinion on a situation she is currently facing. She has been doing contract IT work for a company for several months. The company recently offered her full-time employment. The problem is that she doesn't like the work environment of the company, and she feels it's critically mismanaged and poorly organized.

My advice was that she was under no obligation to accept the position but to prepare for the fact that she may be phased out as a consultant. This might happen not because of sour grapes on the part of company management, but because there are legitimate employment law or tax-related reasons that they need the position to go permanent.

The contractor's relationship with the company could be blurring some lines between what is considered a full-time employee and a contractor. Facts that provide evidence of the degree of control and independence fall into three categories, according to the IRS' web site:

  1. Behavioral: Does the company control or have the right to control what the worker does, and how the worker does his or her job?
  2. Financial: Are the business aspects of the worker's job controlled by the payer? (These include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
  3. Type of Relationship: Are there written contracts or employee-type benefits (i.e., pension plan, insurance, vacation pay, etc.)? Will the relationship continue, and is the work performed a key aspect of the business?