How do you define permanent?

Question for the gang: with average job tenures shrinking year over year (from entire career at one employer, to changing every three years of so), what's the difference between a long-term consultant vs. a permanent employee? Let's leave aside how they get paid (ie, hourly versus salary), as well as benefits (since many of your classic "permanent" employees are on their spouses plans - making the whole "on our health plan" argument moot). Is it cultural? State of mind? Or is it - increasingly - just semantic?

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Permalink Reply by Sandra McCartt on April 5, 2010 at 3:48pm

the problem with your question Martin is that how they are paid is a part of the defining criteria so can't be left out ie; 1099 VS W-2. A perm employee has tax withheld from their paycheck, is eligible for the benefit plan and 401K whereas a consultant is paid on a 1099 basis or works through a staffing agency and is not a direct employee of the company so not eligible for the company benefit plan or 401K participation and does not have withholding deducted by the company.

They may be considered employees of the staffing firm who then deducts withholding tax and does the required reporting for tax purposes. Consultants who work directly for the company on a consulting basis are paid an hourly or monthly rate or paid by the project on a 1099 basis and are required to pay self employement tax and are not eligible for the company medical or 401K plan.

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Permalink Reply by Martin Burns on April 5, 2010 at 4:11pm

Good point - let me clarify the question a bit. I was looking at it from a cultural perspective. How they're paid matters to HR & accounting, but not to their colleagues. If someone's coming in day after day, and producing work, how do their peers in, say, Marketing view them? If they're on-site for 6 months straight, as opposed to someone you "hire" and tax etc that leaves within 2 months of coming onboard, which one seems more permanent to their colleagues?

Sandra McCartt said:

the problem with your question Martin is that how they are paid is a part of the defining criteria so can't be left out ie; 1099 VS W-2. A perm employee has tax withheld from their paycheck, is eligible for the benefit plan and 401K whereas a consultant is paid on a 1099 basis or works through a staffing agency and is not a direct employee of the company so not eligible for the company benefit plan or 401K participation and does not have withholding deducted by the company.

They may be considered employees of the staffing firm who then deducts withholding tax and does the required reporting for tax purposes. Consultants who work directly for the company on a consulting basis are paid an hourly or monthly rate or paid by the project on a 1099 basis and are required to pay self employement tax and are not eligible for the company medical or 401K plan.

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Permalink Reply by Sandra McCartt on April 5, 2010 at 4:34pm

Good question :) I have clients who have had consultants working for over a year in positions that they are unable to fill for some reason or the other or perm candidates are not as experienced. Other employees do not seem to be reacting to the difference in the status as long as the work gets done. It appears that as long as the consultant functions as part of the team nobody seems to care about their employment status.