Ask HN: Is it ok for a company to treat me as a contractor during trial period? | Hacker News Reader

Ask HN: Is it ok for a company to treat me as a contractor during trial period?

4 pointsjoshwcomeau5 comments

I recently got offered a full-time job from a company that I'm excited about working for.

After the interview process, they mentioned that there would be a 30-60 day trial period, which I accepted without issue. I don't mind the idea of proving my worth.

I just got sent the contracts, though, and they want to sign me up as an independent contractor for the first month. I would need to submit bi-weekly invoices in the amount of my salary, even though I'd be doing exactly the same work as I will if/when I join as a proper full-time employee.

This seems really sleazy to me. I think I know why they're doing it (they don't want the tax burden and costs of a full-time employee before they know if I'll work out), but it puts a lot of burden on me. It complicates MY taxes, since I won't have them withheld for this period.

Is this a common/accepted practice? Should I see this as a red flag?

Sidenote: I live and work in Canada, if that makes a difference.

Early stage startup founder here. I usually do a 30 day trial as a contractor for a candidate that I am confident about. This allows me to forgo the terrible interview practices a lot of places have, and focus on ironing out the kinks of working together. How it works:

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30 days only, more than that is too much risk for both of us. The potential hire wants to find a full time job, and we don't want to lose a good person to a competitor.

We pay ahead of time: 50% up front, and 50% halfway through. This helps build goodwill and show the potential hire that we are serious about full time employment.

In this case, either of us can walk away anytime if it is not a good fit. Regardless of who makes the call, the candidate keeps the total that we've paid so far. This allows candidates to be honest when it's not working out instead of pretending like everything is fine to get paid for their work during that time. That allows us both to move on instead of wasting time when it won't work.

As an alternative, candidates can choose to get paid after the fact based on how many days they worked. In this case, we pay 1.25 times their expected salary to compensate them for the risk. Either party can still walk away at any time.

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All of this is designed to build mutual trust, allow either party to walk away during the trial period, and show a potential hire that this really is just a trial period and we won't lead them on into further consulting.

The IRS frowns on employers who pay employees as contractors if they don't meet the criteria for being contractors. If the employer dictates where you work, how you work and when you work, you probably aren't an independent contractor under IRS regulations. The fact that you send them bills doesn't make a difference.

More details here:

https://www.irs.gov/businesses/small-businesses-self-employe...

It's not usual that they didn't bring it up until the end. Usually, on some kind of corp to corp type employment the rate is higher to cover benefits. If it's short term I personally would worry about it(if unemployed) working for yourself can screw up unemployment if they decide to not move forward with you(at least in US). The biggest issue would be they continue to try and keep you as a contractor with out upping the rate.

I just reread it. I think it's unusual to bring it up at the end.

I wouldn't touch such an arrangement with a 10ft pole unless I was truly desperate.

It's pretty easy to hire somebody with a probationary period and terminate them if they don't work out. I currently work for a place with a unionized workforce and probationary periods, and have terminated several new employees for failing probation.

Any startup or other company who claims to need this mechanism is lying to you. Sounds like a scheme to save a few bucks and enable discriminatory behavior with no benefit to you.

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