August 21, 2023

How to Transition Full-Time Roles to Contract Roles

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Contract work has become desirable for more professionals, allowing workers to “test-drive” companies before they consider full-time employment. As we’ve covered extensively, contract workers also benefit companies for a variety of reasons, including:

In uncertain job markets, contract workers can provide your business with more flexibility in hiring. We see many companies transitioning from formerly full-time roles to contract roles to attract professionals who desire this type of position.

According to a 2023 report from Statista, contract staffing is becoming more popular, increasing to 14.1 million professionals in contract roles in 2021, compared to 13.6 million in 2020 and 9.3 million in 2009. If you’re considering reorganizing your workforce, here’s how to evolve full-time employee roles into contract positions for your business.

1. Understand Labor Laws

As the U.S. Chamber of Commerce points out, misclassifying workers can get your business into legal trouble. Contract workers differ from independent contractors. While independent contractors essentially own their businesses as solopreneurs or freelancers, contract employees are classified as employees of a business, who work on a contract basis.

The U.S. Chamber of Commerce defines contract workers as those who:

  • Are at-will workers or are under a contract as employees
  • Are paid hourly wages or a salary
  • Can work on part-time, full-time, or seasonal schedules
  • May receive business benefits
  • Work where and when the company wants
  • Receive necessary work equipment and tools from the business
  • Receive direct supervision while they’re working
  • Typically work fewer than 1,000 hours or less than 1 year for a company

Contract employees complete timesheets or have them verified by the employer. The employer (or the employee’s staffing agency) pays the employee, files payroll taxes, and sends a W-2 form.

Your state may have specific labor laws regarding contract worker classification. Research your state labor office or talk with an attorney about how you can legally transition from a full-time role to a contract role.

One key area to be aware of is that you may face legal risks if you let go of a full-time employee, then rehire them as a contract employee. It’s less risky to transition open positions from full-time to temporary than to hire from scratch.

2. Determine the Scope of Work

Before you transition from a full-time role to a contract role, analyze your business needs to confirm it makes sense. While you may be used to having 24/7 access to a full-time employee via email and text, contract workers may be more likely to work on set schedules. Deadlines for projects may also differ since contract workers have outlined expectations of what they’ll complete once they’re hired.

That’s why contract workers are great solutions for time-based projects with clear expectations. For example:

For full-time roles that tend to work on time-sensitive projects, contract workers may be a great fit since it’s easy to assign duties with clear expectations. Consider whether it makes sense to break down full-time job duties into multiple contract roles or if you can move some job duties from several former full-time roles into new contract roles.  

You’ll also want to account for how to retain the talent former full-time employees brought you if you’re eliminating full-time roles. For example, strategy- and leadership-based roles may not get the same results in contract positions versus full-time permanent employee positions. If you expect to gain strategy and innovation from contract workers, you’ll need to clearly define those expectations in the scope of work.

3. Recalculate Salary Expectations

Since one of the advantages to contract workers over full-time workers is that you’re not obligated to offer full benefits, you can save a lot of money with a contract workforce. However, it’s also important to know that contract workers may have higher salary expectations, especially if they have to pay for benefits like health insurance and paid time off themselves.

Indeed has a payment calculator that helps employers determine how much to pay contractors. You can use this as a starting-off point to adjust a full-time salary into compensation for a contract worker, especially if offerings like benefits have changed for the role.

4. Target Contract Workers

Once you’ve used the scope of work to complete a job description, timeline expectations, and salary offerings, you can target professionals looking for contract work.

One way to effectively tap into the contract worker pipeline is to partner with a recruiting firm that specializes in contractors and contract-to-hire workers. You can gain access to contract workers who specialize in your field and hire them faster than posting a job and waiting for applicants.

If you do post Contract work opportunities, make sure to include information these professionals want to know. This includes:

  • Length of contract
  • Exact duties expected
  • Salary or salary range
  • Any benefits that are offered

You can also include details on what a role could look like once the contract ends. For example, maybe you’ve hired many contract workers into full-time positions once their contract ends. This is something you could highlight in a job description to motivate people to apply.

Need Help Transitioning FTE to Contract Roles? Want to Recruit Contract Employees?

If you’re looking for guidance on changing full-time roles to contract roles, AccruePartners can help. We specialize in recruiting contract and contract-to-hire professionals, as well as full-time workers. Contact us at (704) 632-9955 for a free consultation with our team, or get in touch online.

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