Am I getting screwed in the transition from contractor to employee?
I wouldn't say a 1 week delay is bad at all. I think the real question should be how much are they paying you as a full time employee in relationship to how much you were making as a contractor. If it is the same maybe you were getting screwed as a contractor.
The one week delay really only screws you for the first week that you transition to that new system... But then at the end it's like you get a 1 week bonus!
I'm in Australia, and I get paid monthly. Each pay consists of the past two weeks, as well as two weeks in advance.
However, the last company I worked for (as a full-time salary employee) paid me in I.O.U.s for months at a time, and when I did get my pay-cheques, the superannuation was always missing...
I'm in Australia, and I get paid monthly. Each pay consists of the past two weeks, as well as two weeks in advance.
However, the last company I worked for (as a full-time salary employee) paid me in I.O.U.s for months at a time, and when I did get my pay-cheques, the superannuation was always missing...
I've been paid in this manner in the past as well. It's fairly common to have your first period's pay withheld and not get your first paycheck until the second pay period comes. So you're always getting paid for last week's work. One rationale I've heard for this setup is so that whenever you leave that job you'll end up with one extra paycheck at the very end.
The other rational I heard for witholding 1-2 weeks pay is for the employers benefit. Where I currently work, our vacation for the year is granted Jan 1. However, the entitlement assumes you are going to work for the full year. If one uses up all of ones vacation and leaves the company, the company will use the pay withheld to recoup the vacation time your took, prorated against days worked for the year.
Holy revival, Batman!
I get paid twice a month - on the 15th and the last day of the month. I get paid at the end of every pay period.
I get paid twice a month - on the 15th and the last day of the month. I get paid at the end of every pay period.
Holding the pay is typical. On some jobs even with the government, you pay check is two weeks behind.
When they move you from contractor -> employee here is where you get screwed.
1. Hourly goes to Salary (this means you will work more than 40 per week and get paid 40)
2. Benefit changes. Sometimes they try to justify dropping your pay rate claiming they need to pay for your benefits.
3. Non-compete clauses and such. As an employee, you might get roped into signing stuff that might hender you from doing your own thing.
On the up side, depending on how well your company is doing. You can get a sign-on bonus, and stack options. Since you have been there three years you might be able to get stock with the three years of vesting period already included. That only happens at nice companies.
When they move you from contractor -> employee here is where you get screwed.
1. Hourly goes to Salary (this means you will work more than 40 per week and get paid 40)
2. Benefit changes. Sometimes they try to justify dropping your pay rate claiming they need to pay for your benefits.
3. Non-compete clauses and such. As an employee, you might get roped into signing stuff that might hender you from doing your own thing.
On the up side, depending on how well your company is doing. You can get a sign-on bonus, and stack options. Since you have been there three years you might be able to get stock with the three years of vesting period already included. That only happens at nice companies.
Quote:Original post by Randy of Neuron
Sometimes they try to justify dropping your pay rate claiming they need to pay for your benefits.
Ouch!
I'm going to assume a US-centric view, but most other nations are mostly in line with these.
There are *MANY* reasons for decreased pay for salary from contracting.
- Contractors must provide their own tools which they pay for and maintain. Employees must use the employer-provided tools. (See IRS guidelines.)
- Contractors have liability for their results. Employees are generally not liable for their work.
- Contractors must exist as their own business entity, and are responsible for their own taxes (sometimes called the double-taxation of self employment) and the company hiring them should file a form 1099 to report to the IRS that they paid the contractor. Employees have a portion of their taxes paid directly by the employer, and another part paid through payroll withholdings. That extra cost is typically paid through slightly lower wage.
- Contractors pass through the costs of advertising their services, making bids on jobs (including bids that do not result in work), and time without work. Employees have the luxury of continuous employment with no significant effort.
- Contractors must invoice for the work done and hope to get paid, employees hope to get paid on a regular interval
- Contractors must handle their own business insurance, if anything. Employers must provide workers compensation insurance, disability insurance, unemployment insurance, and assorted federal and state reporting.
- As you mentioned, contractors must provide their own health insurance coverage, retirement plans, FLEX plans, and life insurance, travel insurance, and assorted other benefits. Most employees have many or all of these as part of a comprehensive package.
- Although some contractors are paid on an hourly basis, they are often beholden to their initial bids, and under many circumstances may not be paid if their work doesn't meet specific criteria. Employees must be paid for any work done, regardless of the quality.
- Many contracts limit the number of billable hours, where additional hours required to complete the work cannot be paid. This can be a worse situation than salary employees, since all the employers I have worked with have provided some additional compensation for salaried employees who must work overtime.
- Many other contracts do not bid on billable hours, they bid on the completion of tasks. If that requires working 80 hours in a week the contractor receives no overtime.
There are many additional reasons, but that should be enough to realize that the difference between employee salary and contractor's invoiced payments are not equivalent.
After re-reading the OP, it sounds like he might have actually been illegally employed for about 3 years, unless he was working through a contracting agency or something similar.
my last job I was paid a week behind, but paychecks came every week, and I loved it to death(it was like I was never broke). But yea one week behind sounds about right, which is nice if you decide to change careers.
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