Forum: workplace.stackexchange.com
Tags: <hiring-process><united-states><contracting>
Title: Prospective employer wants me to spend the first month as an independent contractor
Question: I interviewed for a job at a young startup, got an offer, and negotiated compensation. After the negotiation, they called and said that they've been having employees work as ICs for the first month before becoming real, full-time employees. They seemed somewhat flexible on the issue, but I'm not sure what to think.   Is this normal/standard?  Why would they only mention it now?  Should I be concerned?

Answers:
sents: text: If this is your first job out of school, you may want to try this.
text: I would
text: NOT leave a steady W-2 job for such an opportunity.
text: Assuming this is the US, here are some things you'll need to worry about:
text: You are not eligible for health insurance benefits.
text: If you think your auto insurance is outrageously priced, wait until you see what COBRA costs from your current employer.
text: You are not eligible for unemployment benefits.
text: If the job doesn't work out, you're entirely on your own.
text: You are responsible for your own taxes, both Income and self-employment.
text: You should figure on giving Uncle Guido, err, Uncle Sam about 40% of your check.
text: Make sure you negotiate compensation accordingly.
text: Your taxes will be more complicated.
text: Say hello to the 1040 long form, and its buddies Schedules C and SE.
text: Of course, it's your career, so none of us can tell you what to do.
text: We can only advise you of things to be careful of.
answer_details: author: workplace.stackexchange.com/users/9264/Wesley Long
score: 11
sents: text: They're hedging their bets .
text: With any new hire, there's a risk of making a mistake and hiring someone who isn't a good fit / doesn't work out /
text: doesn't fit their culture, and so on.
text: With this arrangement, they get to take a trial run before making the commitment of hiring you full time.
text: If the one month trial run doesn't impress them, it's a lot easier to just let the contract expire than to fire a full time employee.
text: Is this normal/standard?
text: It's common enough that there's a term for it - "contract to hire".
text: Should I be concerned?
text: Make sure you have sufficient insurance coverage (very important if you're in the US) and you can survive either being let go in a month or having them decide to extend the contract for another 6 instead of making you full time.
text: Since you won't be a full time employee for another month (possibly longer), you might want to consider whether you should continue to search for other job leads or not.
text: It may make sense to accept this offer but let them know that the one month trial period goes both ways - you'll keep looking until they're ready to make a commitment.
answer_details: author: workplace.stackexchange.com/users/10905/Dan Pichelman
score: 8
sents: text: I would consider this a huge red flag and turn own the offer.
text: Not because it is contract for hire but because they didn't tell that up front before the first interview.
text: It is a real concern because you will have no benefits until you are a real employee and they may not do as promised and convert you after a month especially since they have already misled you about the nature of the employment by not disclosing this up front.
text: I would trust nothing this company says at this point.
text: If you are going to work as a contractor, it is far better to do it for a contracting firm, so that taxes etc are correct.
text: This is a logistical nightmare for you.
text: You will have to pay medicare, social security, federal and state taxes out of what they pay you.
text: You will have to buy your own health insurance.
text: You might be required to get a business license.
answer_details: author: workplace.stackexchange.com/users/93/HLGEM
score: 7
sents: text: This type of situation is known as contract-to-hire.
text: It probably depends on the area, but contract-to-hire, from my experience, is by no means common, but it's definitely not a unique situation.
text: It is, however, atypical to not mention that it's contract-to-hire until after salary negotiation.
text: I would expect as soon as they were ready to make an offer, at the absolute latest, for them to mention that detail, but even more likely, they'd just tell you near the very beginning of the interview process.
text: Possible explanations I can think up are it may be that they neglected to tell you because to them it's no big deal, and they fully have the expectation that they will hire you at the end, or it could be a sign of some oversight which may indicate some degree of disorganization.
text: The number one thing you should consider very carefully is if you are located in America is that as a contractor you will likely receive no benefits including health insurance.
answer_details: author: workplace.stackexchange.com/users/17885/Kai
score: 2
sents: text: The appropriate response would be something like, "I'm only interested in full employment, not contract work under any circumstances.
text: " If they want to hire you, they should hire you.
text: They're acting unethically in two ways:1: changing the terms mid-negotiation.
text: This is dishonest.
text: It also shifts significant costs onto you: insurance, taxes, unemployment benefits, employee protections, etc.2: assuming this is in the US, this is essentially illegal, if you're doing the same work under the same circumstances as an employee, you should be an employee and be subject to all the benefits and protections employees are subject to.
text: Misclassifying employees as contractors has serious consequences for employers with agencies from the IRS to the Department of Labor.
answer_details: author: workplace.stackexchange.com/users/49888/Glen Pierce
score: 2

Summary of the answers:
They are doing this as a kind of trial period to make it easier to let the contract expire if the trial run doesn't impress them. This is fairly common. 
The general consensus is that this is not exactly 'standard' or common, but it's not unusual either. The company may only be mentioning this now because they are hedging their bets about whether you will be a good hire or not. However, it could also be a sign of disorganisation and some people would be inclined to distrust the company from this point on.