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They don't treat them as equal because of the legal system. I believe in the eyes of the law, if you treat a non-FTE as a FTE then they are essentially as FTE. That means companies have to treat CWs this way as a means to protect themselves against litigation. It's a little more complicated then just "the purpose of making money"

Microsoft got in trouble for this in the 90s for treating permatemps too similarly to FTEs. https://www.nytimes.com/2000/12/13/business/technology-temp-...

The case you're talking about is Vizcaino v. Microsoft

https://corporate.findlaw.com/human-resources/vizcaino-v-mic...

They don't treat them as equal because of the legal system. So then why dont they hire CW's as FTE's after 1 year? Why do they abuse the term CW, and keep using CW's for longer than 1 year when the job does not change?

Why do these large companies have a majority of their workforce as CW's vs FTE? Costs.. FTE's are higher costs, so they shift the savings to a CW workforce that is basically a FTE, but lower costs in all aspects where then all liability is shifted to the recruiter.

CW's are a lower cost workforce for companies that need specific skills. The job is suppose to be by legal standards and IRS "a short period of time that should not extend 1 year...." yet it does. Companies continued use of a CW in a FTE capacity is a complete abuse of the CW system imho.

Most people dont know, but companies have at least 2 type of CW contracts. Because of the Vizcaino v. Microsoft case CW's were forced to take a "break" for legal reasons. So a CW would have a contract that would start at 6 months, then get extended to 12 months, and then within the last few years got companies could extend to a max of 18 months before a CW was forced to take a 6 month break. When 6 months came back around the CW could have their very job back, or go elsewhere in the company.

The other type of contract is a never ending. You're a CW that is hired thru a tech recruiter and you settle on wage and that is what you get until you leave. Perks are null in most cases. The wage can be higher, but companies set limits on the job so the CW get never get anymore as that is the rate set for the job.

My experience is quite different. I enjoy contract work. And it is quite rare that I am treated very different than an FTE. While I don't get the same benefits, I am paid more, in fact I have a prepared statement for when FTE's ask how much I am making to avoid the awkward conversation after. I pay for my own HC and Roth and still make more than FTE's doing similar work as me at the same company. I control my WFH schedule, vacation, sick, etc. I also enjoy working at different places so I may be working at a financial company for six months, about half way through that I will start looking for a new gig (if I don't have one already) and that new gig might turn out to be a utility company. They often ask me back for projects as well. So it's nice to see old friends again. I obviously don't work on the help desk or racking servers but in tough times I wouldn't turn down datacenter work. Most of the gig's I work at approach me about coming on full time but at most I might extended my contract a few months. Most of my work I find on my own but I also work as a sub-contractor for a few places I like if they need help and our schedules align.

I'm trying to get started in this world! Mind if I ask a few questions?

- When you were getting started, how did you find your contracts? Did you use an agency or recruiters, or make connections on your own?

- How do you negotiate the length of a contract? From what I've seen, most employers are looking for 6 months to a year, while most freelancers are looking for 2 to 4 months.

- How long did it take to start charging premium rates?

Obviously it's a tough market right now but I'm trying to figure out how to turn some small contracts into a sustainable lifestyle and would love to learn from your experience.

Delighted to help.

- When you were getting started, how did you find your contracts? Did you use an agency or recruiters, or make connections on your own?

My network. I had worked in technical sales for several years and had built up a decent size network and a great reputation. I did approach one local smaller agency where I knew they specialized in an area of consulting and I was in the same realm but they didn't have anyone who did the type of work I specialize(d) in so I offered to accompany them on calls/meetings to expand the sale and they took a portion of the revenue. I did the same with another firm that was small and I knew the owner. I haven't used agents or recruiters, I guess I haven't needed to but if they add value I wouldn't have a problem using them to get land gigs. It's always about the work, I don't chase the money, and I find that the works (usually) turns out to be great and the money is too.

- How do you negotiate the length of a contract? From what I've seen, most employers are looking for 6 months to a year, while most freelancers are looking for 2 to 4 months.

I don't do staff augmentation work if I can avoid it. Then it is all project based work, so a few months, typically. Although I had a gig last almost a year last year. I scope out the work and send them a SOW, we can negotiate rates but I always bid high. If I was just starting out and building a reputation I would bid lower, and tell them that I was purposely bidding low and ask them for a letter of reference and/or take reference calls from other customers.

- How long did it take to start charging premium rates?

Not long but I had a head start because of my reputation and blog. The market dictates the rate quite a bit, and I changed my specialty so I went through a period of about six months where I was transitioning and charged lower rates to get gig to build my reputation back up and get the experience.

Obviously it's a tough market right now but I'm trying to figure out how to turn some small contracts into a sustainable lifestyle and would love to learn from your experience.

This is the best thing you can do. I have found if you treat customers like family, they will fall in love with you and want you on all their projects. I get birthday and Christmas cards (yes they still exist) from customers. I get asked advice on other projects that have nothing to do with my specialty because they trust my opinion. I get asked to bid on work even if its remotely related to what I do. I had the worlds largest financial company (you can guess who it is) wait four months for me to be available for work, essentially holding up their entire project for me. I regularly get asked by the largest airline in the US if I know anyone that specializes in 'blah' because we have built a level of trust over the last six years, and I pass that work on to my network.

I feel like if I treat everyone with respect and kindness it is returned back to me 10x. For example, if a dir at said airline calls me at 2am, I pick up the phone and do anything I can to help, at no cost, and then call him about a week later to see if things are working and almost every time I get work from it.

If you can build and maintain those relationships you will have more work than you can handle.

Thanks for the response, very helpful!

I've done my best to build relationships over my 8 years in the software development industry, but I don't have much work to show for it after querying my network. All of my work to date has been from external sources.

I also make a point to over-deliver, both in availability and deliverables, and to ask for referrals.

I wonder if the types of interpersonal connections in tech sales are more valuable for finding work than those in software development - I'm certain I could tap my network for a job offer easily, but contract work has been a tougher sell.

It's still early days though, we'll see how things look 6 months down the line after I have a couple more contracts under my belt.

What is your prepared statement regarding pay?

I have a range I stay in. I have a SOW that I just use a template, pull things out, put things in, depending on the scoping call/requirements. I don't do MSA's.

Contract-to-hire still exists, but you should talk to the recruiter to try to gauge the possibility of that up-front if it's important to you. An honest recruiter will give you a sense. And yes, there are plenty of companies that abuse the contract worker system as pseudo-permanent employees with less benefits, pay and leverage. But that is actually illegal and there have been a number of successful co-employment lawsuits. Many companies have policies that contracts can never be extended more than 1 or 2 years in order to mitigate this risk.

I think there’s also the issue of H1B/Visa contract workers getting abused by the companies they were contracted out to and losing half their pay to the staffing agency they work for.

What you are saying is completely spot-on. Large companies especially microsoft, intel and now google use the (permanent)contract worker in a majority of roles now. It seems especially predominant in IT helpdesk, and datacenter technician work. It is really bad as these jobs are usually a stepping stone for people to get their foot in the door and learn and grow to more senior positions in the company. For my company IT helpdesk used to be staffed by FTE's who got stock and benefits, now it is 100% contract workers with no chance for moving to FTE at all, very sad. In addition folks that are in these roles alot of times come from low income backgrounds so it seems an effective way to keeping them from moving ahead. Lets hope laws are introduced to stop this horrible practice as it really is eating this country alive.