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The 1099 Route and the Technical Staffing Firms

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Summary: Technical staffing services are now very considerate about their technical workers. They are offering good benefits and options in career building. Working as a technical staffing firm can offer them many advantages compared to working a contractor.

Independent contractors are often confused with traditional temporary techinical workers. An independent contractor is a person who usually works for more than one person at a time, who completes projects and goals for an employer in a setting of his or her own choosing rather than the employer's choosing, and who performs the work at the time the worker picks rather than when the employer chooses.

The contractor usually sends a bill directly to the person for whom the work was done. The contractor is responsible for paying his or her own taxes and benefits. That means the contractor has to set up a system of withholding taxes and, if desired, benefits like health and life insurance and a retirement plan. The generation of  baby boomers (those born between 1945 and 1964) are concerned about whether Social Security will be around when they get ready to retire, so they feel they had better do their own retirement planning.



Things like 401(k) plans and mutual funds are part of the everyday verbiage of today's professional temp and independent contractor.

Those who have marketable skills, which are a characteristic of today's successful white collar temp, will find they have a lot of options to choose from as they decide which staffing service to work through. What are the things that the professional temp should look for? The temp should pick the service that will pay the most money and offer the most benefits and that will best fit the lifestyle and needs of the temp.

Let's take the example of Martha, a creative writer. Martha worked for a government agency from the time she graduated from a prestigious university in the mid 1960s until 1997. Her agency decided to offer special packages to those who had more than 30 years of service in order to try to get some of the employees to take early retirement, as government departments will do.

Martha weighed her options and decided to take the government up on their offer of early retirement. But Martha was only 52 years old and was bored as a retiree. She did not want to fill her life with volunteer work, and her family obligations allowed her a lot of flexibility. Martha decided to become an independent contractor and do freelance work.

Martha picked up a lot of work and specialized in writing internal newsletters for corporations. These corporations would hire Martha to develop the stories and get the newsletters published so that they looked professional. Martha did the work from home using a desktop system she set up herself, and subcontracted with a direct mail company that mailed the letters to the addresses she provided.

Martha enjoyed the work very much until it came time to do her taxes. Record keeping had never been one of her strong points. When the companies she developed the newsletters for sent her the appropriate 1099 forms she was at a loss as to what to do with them. She ended up paying a CPA a lot of money to do her taxes. All the forms she had to keep up with were a nightmare. As much as Martha enjoyed her work, she was not sure if all the paperwork was worth it until a friend told her about a staffing service he worked for that handled those problems which bring us to the next topic.

The Trend from Independent Contractors to Pure Technical Staffing Firms

Martha visited flexible people staffing service on the recommendation of her friend Michael, who worked there in the field of information technology. He told her this service would pay her a set salary a year, no matter how many or few projects she worked on, and would also provide her with health insurance and stock options. That is what had happened to Michael; it had turned out to be a win win situation for him.

Michael had chosen this particular staffing service because they recruited and successfully placed information technology specialists and creative writers. When Michael signed on with this service he was told, based on his skills, he would make $62,000 a year. That meant the staffing service would pay him the same amount twice a month, regardless of how many projects, hours, or days he worked for the staffing service, as well as providing him fringe benefits. This was a different concept from the service Michael had previously worked for. The previous staffing service paid him by the hour and did not provide any type of holiday, health, or retirement benefits.

Flexible People Staffing Service offered Michael financial security and peace of mind. These things were important since he was 42 years old, had many more years to work, and had two children to support and educate. The service sent Michael to various cities to install computer software and educate businesses on the type of software that would work best for each business.

During the weeks when Michael did not have an assignment, the staffing service sent him to training classes on the newest and latest tools to be successful in the world of information technology. That was good for both Michael and the staffing service. It meant he was either working or learning new skills. The more skills he learned, the more placeable he was. The more placeable he was, the more he worked. The more he worked, the more money the staffing service made.

Even though others might have considered Michael a professional temp, the staffing service he worked for considered and treated him like a full time employee. He received an annual salary and all the regular insurance and retirement benefits that most full time employees receive.

The difference between Michael and independent contractors is that Michael received an annual salary and was not just paid per project the way most independent contractors are. He received health insurance, stock options, 401(k) contributions, and holiday and vacation pay. He did not have separate 1099 forms coming to him from companies he worked for; he received a regular W 2 form from the staffing service.

This trend of providing the best of the best in order to attract professional and technical people to the world of temping or staffing is one that will grow. Staffing services are competing to attract the most skilled people, and thus will compete to offer the best benefits. This is operating outside the norm for many in the traditional world of temping. Many staffing services will pay you, the professional technical temp, the way you want to be paid: by the hour, by the project, or with an annual salary. It all depends on whether you have the skills that are in demand by the staffing services that are competing for the most marketable professional technical temps.

As stated earlier, the increase in the staffing or temp business has been a result of many companies downsizing to save the costs of carrying a large number of employees on their payroll and funding their benefits. The companies have fired people and turned to the staffing industry to hire temps to get the work done. In the past, staffing services did not provide much in the way of benefits to the temp; but that is all changing. Staffing services are now competing to get the most qualified people to work for them. The fastest growing segment of the temporary industry is the professional technical or white collar area, and these people will not work for low hourly wages, like many temps in the past have, and they want benefits.

In response to this demand, staffing services are being more and more creative in the benefits they offer. For example, they may pay someone an annual salary as opposed to paying by the project or by the hour. They may offer holiday and sick pay. They may offer the same benefits to the professional technical temps that they offer others at the staffing company, such as the recruiters who place the professional temp on the job. Staffing services are now making stock options and retirement plans available to the professional technical temp as a way of attracting people to work for them.
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