> This can work well if the person currently functions as a freelance consultant or is unemployed but has worked as a consultant in the past.

Sure, that's a lot like what I was getting at with the whole valuing stability thing. It can also work if the person being hired is having a hard time finding a job.

>Also, ideally you have a specific small project for them to work on.

Actually giving them a project, you know, meeting the legal definition for "contractors" is super rare, at least on the middle where I work. I do see it happen, but it's usually those "10x" programmers who get those jobs. Or it's jobs working for poor companies that pay very little.

In the middle, you find people like me, usually working through corporations (or in my case, whole chains of corporations) that end up paying the contractor on a W2... the idea being that the irs is less likely to reclassify the kid if someone is paying payroll taxes somewhere - because the work does not make the legal definition of contractor.

As an aside, I think most of this shell game isn't about legal liability; it's about making it clear to the other employees who is a temp and who isn't. From a legal perspective, compared to what you pay a body shop, firing someone just isn't that expensive. My belief is that the major cost in firing someone that is performing okay is in morale of your remaining employees. firing your contractors first allows you to have the flexibility to fire someone without making your full time folk feel like they might be next.

>Finally, you have to be able to pay them the market rate. If all of that fits (rare) then it's a great choice.

See, it's not rare, and it happens at all pay grades. Different pay grades have different rituals and ways of arranging things, though. Right now I'm working as a "contractor" - I'm going through some shady body shop, but I actually sit at a desk in the office and eat the free food with the employees. They pay okay, and the expectation they set was that I'll be a contractor for a year, I mean, assuming things work out, and then if we like oneanother, they'll hire me full time at the end of the year.

That kind of arrangement is really common in this industry when the economy is good. They need people now, and I can be a person now, and if they like me, well, that's an easy hire. If they don't like me, or if market conditions change before the year is out, they can let me go without damaging employee morale as much as firing a full-timer. (similar arrangements, with less emphasis on you becoming a full-timer at the end are common when the economy is bad.)

I like it 'cause I'm going through a company that I mostly own, and it gets a bunch of money corp to corp which I can use to pay my people to see if my business can get off the ground, (it pays me, too, on a W2, and buys me mediocre health insurance) and if at the end of the year, it does take off, well, I quit, and hey I was a contractor, right? that was the deal. and if my business doesn't take off, I've got a foot in the door at a decent big company where I might want to actually work for a few years, you know, put something on my resume besides abject failure.

But, as far as I can tell, this arrangement is super common. Actually going through a corporation you own part of is less common, but not unheard of.