Contract To Hire Discount – Andrew McWatters
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In software development, contract to hire employment is common. Usually, a contractor and employer will agree to an hourly rate. Upon conversion to full-time employment, this hourly rate will also convert to a salary.
When employers adjust base pay, they will usually adjust it down to account primarily for two employer contributions. These are a 401(k) match, usually at 3%, and a health insurance employer contribution, which at the time of writing (2021/2022) is on average $16,253 / yr1.
When you agree to a rate as a contractor, this rate should thusly include a 3% + $8.00/hr premium. Without this rate premium, a contract to hire agreement is a discount for the employer.
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