Author Topic: Serious Employment Decision  (Read 5022 times)

Insanity

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Serious Employment Decision
« on: August 21, 2013, 11:31:56 AM »
I am currently W-2, contract to hire.  The contract terms is currently 3 months (one month in already).  There is no known timeframe for conversion, if at all.  The manager claims the work is there they are just waiting for the postings to be available.  There are roughly 15 of us that are in the same situation.  The first month has been training and waiting mode.  No real work yet.

I have gotten a full 1099 contract offer.  The term is for one year with a potential extension to 18 months.

Rate wise:  The 1099 is about 30% more than the contract to hire (the hire salary will make the contract closer to 40% higher).
Benefits:  Neither has benefits and I will be COBRA (due to pre-existing condition and current uncertainty in health care market, I have no idea what the difference will be). Benefits would very much favor being hired.
Work location:  1099 will require slightly more travel, and by slightly I mean a little bit more than 0.  I'll have to do some travel that will most likely either be an overnight or up and back type.

I have no idea how to evaluate this.  The work is slightly different - the 1099 is more interesting work, but I'm not sure it has a chance to be successful based on the task they are trying to complete. Neither contract has a non-compete clause that would preclude me from working with the other.  The true issue is that I don't think I can manage both (the contract to hire looks like it might require me being on-line at specified parts of the day).

Thoughts?



jrhampt

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Re: Serious Employment Decision
« Reply #1 on: August 21, 2013, 11:39:11 AM »
Bird in the hand...I would take the 1099 offer and worry about the other work if/when it actually comes through.  It sounds like the only real advantage of the first job is that it could potentially turn into a full-time position, correct?  And you have invested some time in training already, but I'd go with the other one. 

Insanity

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Re: Serious Employment Decision
« Reply #2 on: August 21, 2013, 11:47:54 AM »
Bird in the hand...I would take the 1099 offer and worry about the other work if/when it actually comes through.  It sounds like the only real advantage of the first job is that it could potentially turn into a full-time position, correct?  And you have invested some time in training already, but I'd go with the other one.

That and the dollar amounts.  I'm not sure if the percentages work out to be enough to take the chance on going 1099.

Insanity

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Re: Serious Employment Decision
« Reply #3 on: August 30, 2013, 08:06:52 AM »
Well, hopefully I wasn't stupid.   I was told I would be getting a full-time offer from the contract to hire.  Salary is slightly less than I was making before I was laid off, but the paid holidays + 401K match is much better (11 vs 7 and 100% of 4% vs 100% of the 1% of 6% or something like that).

I was never able to get medical coverage confirmed.  The good news is, when I told the recruiter for the 1099 position that, she mentioned ACA and October 1st.  Told her I wouldn't know till closer to then, but if it did work out I would be very interested.

Now, I just have to wait 1 to 3 weeks for the actual offer to come through :-/

jpo

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Re: Serious Employment Decision
« Reply #4 on: August 30, 2013, 08:32:42 AM »
Contract to hire always seemed like being between a rock and a hard place. What if you don't like the hire-in offer?

I would take the 1099.

Insanity

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Re: Serious Employment Decision
« Reply #5 on: August 30, 2013, 08:48:38 AM »
Contract to hire always seemed like being between a rock and a hard place. What if you don't like the hire-in offer?

I would take the 1099.

The issue is medical insurance.  With a pre-existing condition and having expensive medicine, I'm in one of two cases - having to shell out for the medicine again this year (fortunately, they have deductible assistance but only once a year) while paying a high rate or being declined for coverage or paying COBRA until ACA kicks in and hoping that things change.

I ran the numbers, and the truth of the matter is, I don't come out that much ahead at this point.  I know what the offer is supposed to be and while it isn't great, it is workable (and I'm not sure 100% what I can expense yet).  What is becoming frustrating  about the contract to hire is the fact that I haven't done any real work yet - and I keep asking.

Combine the medical situation with an uncertainty of whether I'm the type who can succeed on their own .. yeah..  Maybe that's why I didn't push so hard to find more about the medical - fear.

footenote

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Re: Serious Employment Decision
« Reply #6 on: August 30, 2013, 11:20:43 AM »
You mentioned ACA and Oct 1. October is the earliest you can sign up for an ACA exchange plan, but the plan does not go into effect until Jan 2014. So if you do not get employer-sponsored healthcare in the meantime, you are on COBRA through year-end. (I'm in the same boat.)

Do check out when exchange rates will be published in your state. It's Sept 6 here in Minnesota and rates have already been published in NY and CA. Good luck

Insanity

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Re: Serious Employment Decision
« Reply #7 on: August 30, 2013, 11:58:42 AM »
You mentioned ACA and Oct 1. October is the earliest you can sign up for an ACA exchange plan, but the plan does not go into effect until Jan 2014. So if you do not get employer-sponsored healthcare in the meantime, you are on COBRA through year-end. (I'm in the same boat.)

Do check out when exchange rates will be published in your state. It's Sept 6 here in Minnesota and rates have already been published in NY and CA. Good luck

Thanks for that clarification.  Do you know when some of the insurance companies are going to start complying with it?  What impact it will have on rates? 

The biggest reason for turning down the position was that I didn't want to pay COBRA rates for a full year (it would have left me at a wash take home pay wise, but being a W-2 at the place I'm at with their side perks bring me way ahead of that).

jrhampt

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Re: Serious Employment Decision
« Reply #8 on: August 30, 2013, 12:48:51 PM »
Our exchange is now functioning in CT...the exchange people have been out at the library and the Y giving informational sessions...maybe you could do a search to see if there's anything like that going on in your area.

kkbmustang

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Re: Serious Employment Decision
« Reply #9 on: August 30, 2013, 02:16:45 PM »
Don't forget that if you are a W-2 employee, the employer pays half of your employment taxes. Independent contractors pay the full amount.

Insanity

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Re: Serious Employment Decision
« Reply #10 on: August 30, 2013, 07:42:22 PM »
Don't forget that if you are a W-2 employee, the employer pays half of your employment taxes. Independent contractors pay the full amount.

Yep.  The 1099 rate being offered was 1.5x that of the W-2 hourly rate which would more than cover that.  The issue was the medical coverage.


footenote

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Re: Serious Employment Decision
« Reply #11 on: August 31, 2013, 09:04:20 AM »
You mentioned ACA and Oct 1. October is the earliest you can sign up for an ACA exchange plan, but the plan does not go into effect until Jan 2014. So if you do not get employer-sponsored healthcare in the meantime, you are on COBRA through year-end. (I'm in the same boat.)

Do check out when exchange rates will be published in your state. It's Sept 6 here in Minnesota and rates have already been published in NY and CA. Good luck

Thanks for that clarification.  Do you know when some of the insurance companies are going to start complying with it?  What impact it will have on rates? 

The biggest reason for turning down the position was that I didn't want to pay COBRA rates for a full year (it would have left me at a wash take home pay wise, but being a W-2 at the place I'm at with their side perks bring me way ahead of that).

All U.S. medical insurers must comply with all provisions starting Jan 2014, including guaranteed issue (you can't be turned down because of pre-existing conditions). Insurers may or may not participate on the exchanges, and rates are an unknown. What is known about rates is that they will generally be higher for younger people and lower for those receiving a tax credit (aka "subsidy").

Here is Kaiser's calculator: http://kff.org/interactive/subsidy-calculator/

(Warning: this isn't tied to any state's real-life rates. It's only an estimator for tax credits. Your actual rates will vary based on your age and state of residence.)

Insanity

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Re: Serious Employment Decision
« Reply #12 on: August 31, 2013, 02:48:07 PM »
Thanks for the link footnote.   I'm not eligible for the subsidies so I guess I just have to wait and see how it plays out.

Now, if I could also just get over the fear of being on my own :)

Insanity

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Re: Serious Employment Decision
« Reply #13 on: September 09, 2013, 09:21:25 AM »
One of the VPs called me last week to discuss the 1099 situation.  The call was rather confrontational to a degree.   They asked explicitly why I proceeded with contract negotiations if I hadn't planned on taking the contract.  Really not a great question to ask.  I calmly said:  I never planned on turning it down, and I was upfront with the recruiter regarding the situation.  When we agreed on the rate, I informed her it was dependent upon insurance.   That never materialized.  He then started running numbers and said:  you mean <yearly number> doesn't work?  I told him COBRA is a large portion of that.  The call ended with the VP stating that they'll run some projections and numbers and see what they come back with.

He called this morning and said they were willing to up their hourly rate.

So, I went to run the numbers again, and for some reason it always seems like the 1099 way comes out behind the W-2.  I'm not quite sure if I am doing it wrong.  Even with the new rate and lowered medical costs out of pocket.  I am factoring in $10K for business expenses (which I suspect is way higher then it will ultimately be), $4K for medical, $4K for HSA contribution from employer, $10K SIMPLE retirement, and I am basing it on a 48 work week year for the contract rate.

The new rate works out to be 1.56x the projected offer for the hire position.  So it would be like $50/hr vs $78.25/hr.

I am very close to turning it down again simply because I don't think I understand this enough to feel comfortable with it.