Contract vs. Contract-to-Hire

As a hiring manager, you likely have choices about how you hire. Aside from selecting a candidate to join your full-time staff, you can also opt for a simple, short-term contract. However, there is a third choice not all hiring managers take advantage of: the contract-to-hire approach.

If you are wondering what the difference is between a contract and a contract-to-hire arrangement, here’s what you need to know.

Contract Positions

Contract positions are short term in nature. Usually, the roles are project-oriented, and you only need a candidate’s skill set available for a defined period of time.

When you hire a professional as a contractor, both you and they know the position is finite in nature. Often, this person never formally joins your payroll. Instead, you either bring them on as a 1099 independent contractor or partner with a local staffing firm that can serve as the employer-of-record, allowing the worker to remain on the staffing firm’s payroll during the assignment.

In both cases, the worker only remains with you for the duration of the project or until the need ends. Then, you part ways, as dictated in the contract. There is no promise of long-term work, nor is there an expectation that will occur.

However, while both the 1099 and staffing firm approaches create the same employment result, going the 1099 route can be substantially more complex. The laws dictating who does and does not qualify as an independent contractor are strict, and failing to follow them can lead to serious legal and financial consequences. By partnering with a staffing firm, you can avoid many of these potential risks.

Contract-to-Hire Positions

Contract-to-hire is a slightly different arrangement in comparison to a straight contract job. With a contract-to-hire position, you partner with a staffing firm to find a candidate who may be suitable for long-term employment. However, instead of immediately bringing them onto your payroll, the worker remains an employee of the staffing firm for a set period of time, usually a specific number of weeks.

During that initial period, the professional works in the role you are looking to fill permanently. They perform the associated duties and work with their potential new employer, just as they would if they had been hired on immediately.

The difference is, if they aren’t a good fit, you have no long-term obligation. You can release them from the assignment and seek out a new candidate, allowing you to find someone who is ideal for the position before they join your payroll. Essentially, a contract-to-hire arrangement enables you to conduct working interviews, giving you a chance to observe the person in the role before formally extending a long-term job offer.

Both contract and contract-to-hire opportunities have their place in the hiring world. Consider your precise needs and see if one approach is a better fit. If you are looking for a staffing firm to assist with your contract or contract-to-hire hiring needs, the team at The Squires Group wants to hear from you. Contact us to speak with one of our hiring specialists today and see how our services can benefit you.

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