negotiating with contract houses?

[hostage]

I am an Engineer that works for a large company and have been for the past 5 years. To get out of paying me benefits, this large company used a contract house/head hunter to hire me for this job. Normally every 18 months they renew my contract with me and I can renegotiate. My contract house has no interaction with me other than sending me a paycheck. In reality I work for the boss at the large company. The contract house gets paid an unknown amount of money from the large company and then they give me a portion of that.

Yesterday I found out my contract house was being bought out by another contract house and they would no longer be able to be my contract house, since they would not be authorized by the large corporation. As the large company still needs me there and my old contract house can't employee me any more, it has made things a little unusual. I would compare it to be a free agent. I have a company that wants me to work for them, I have 9 contract houses that are authorized to work with said large company. I will end up going with the highest bidder.

I don't know if I can get my current contract house to disclose their bill rate, but I think I could estimate their cost of having me work for them. The contract house does not supply me with work place or a computer, the large company does that. So what I am asking, what are the costs for unemployment insurance, social security that an employer has to pay and etc? A good person to answer this would be someone who has employees in the state of New York.

Thanks in advance,

Hostage

 

[tpenfield]

Re: negotiating with contract houses?

Find a permanent job that pays benefits . . . then start the negotiations with the contract houses and company that won't pay you benefits.

 

[littlerayray]

Re: negotiating with contract houses?

or just ask the company boss if he wants to cut out the middle man

 

[colbyt]

Re: negotiating with contract houses?

I can answer part of your question. The employer portion of FICA is the same as the employee rate 6.7% of gross the for 2012. The unemployment portion for KY is is 3.28% maximum with reductions for no claims. NY may be more or not likely less.

I will add that if you were an employee for this "contract house" you may be entitled to file for unemployment if your position with them is eliminated.

 

[rbh]

Re: negotiating with contract houses?

I bet the contract house is not making more than 5-8% of what you net. (does not include gov deductions)
Talk to the HR person or whom ever and was said avoid the middle man, hire you direct as a contractor.

 

[rogerwa]

Re: negotiating with contract houses?

Our company will not hire independents so if I find someone I have to get them to work as a pass through. In most cases, these are not employees of the pass through company just an independent once removed. The guys I work with have a billing rate that more than makes up for the health insurance and stability issues. We may pay anywhere from $95 to $130 an hour for these employees and they take home over 90% of that. The 10% paying the pass through for their trouble and the requisite indemnity they have for the contractor.

If you are getting paid a wage similar to the employee without the benefits, you need to renegotiate your deal.

 

[Fishing Dude too]

Re: negotiating with contract houses?

Know one guy who gets about 240 hr for his contract. but he does specialty work

 

[avenger79]

Re: negotiating with contract houses?

Hostage, I have played the contract game over the years a few times. Chances are the shop that purchased your old contract shop, also purchased your contract. You trying to get into another shop will cause your big company employer heartache as they would have to buy out your contract from the purchasing shop. Chances are it won't happen. They very seldom allow employees to move from one shop to another as they have contracts with the shops as well.
I have been through this once with two shops and an employer. One shop claiming I was their employee because I had worked with them previously. it was not pleasant for any of us and took a few weeks to work out. During that time "big company" was very forward with if it comes to a liability we'll have to let you go.
Engineers are very plentiful right now in the employee pool of the unemployed so don't press too hard. Just my thoughts. No such thing as en employee who can't be replaced as they say.

good luck, and I agree, get a direct position, it is very nice to be on this side of the fence again.

 

[hostage]

Re: negotiating with contract houses?

The large company I work for does not allow me to be an indi consultant/contractor. They had issues with this before and took steps to make sure that non-employees work through a firm. My current contract house is being bought out by a by another one that isn't approved by the large company I work for. My contract house went so far to provide me a list of contract houses that are approved. So they not only admitted they can't be my contract house, but they also provided me a list of competitors that are allowed to work for the big company. For the most part these houses don't provide any benefits other than what is federally mandated.

Edit: I think I am estimating this correctly and this is all the costs the employer has to pay for me, short of stamps and payroll processing:
SS 6.2%
Unemployment ~6.2%
Medicare ~1.45%
Workers Comp ~ .3%

I sit behind a computer all day.

-Hostage

 

[avenger79]

Re: negotiating with contract houses?

that's good in some ways it does allow you to neg a new deal with another house. Some do allow for vacation and holidays if you're with them long enough. May want to add that in if you can to sweeten the deal a little.
I have seen a deal like yours happen once. The company we worked for recommended a shop for the contractors. It was their preferred shop. Most wound up with good deals out of it but not much more in revenue.

 

[avenger79]

Re: negotiating with contract houses?

bubba I believe he was saying his company doesn't hire folks who try to be their own contract shop. Many companies won't do that.

as far as the experience, well many companies are letting people go with a lot more then 5 years exp. that's almost more along the new enough we should keep him line.
I am surprised they allowed him to stay contract for 5 years consecutive. most places it's 1 or maybe 2 years at moost then you have to leave for 30-90 days.

 

[Limited-Time]

Re: negotiating with contract houses?

Welcome to the new world order in employment. Permanent temporary employees. Several of the larger manufactures in this area have utilized this as a long term tactic to reduce their labor rates. Works great when the economy is down unemployment is up and people are having to settle for reduced bennies, lower pay rates and long term temporary employment. Some manufactures contract with a single temp service, others use several. The tactic allows the manufacture to off load drug screening, aptitude testing and most of all the cost of bennies.

 

[bruceb58]

Re: negotiating with contract houses?

Edit: I think I am estimating this correctly and this is all the costs the employer has to pay for me, short of stamps and payroll processing:
SS 6.2%
Unemployment ~6.2%
Medicare ~1.45%
Workers Comp ~ .3%

I sit behind a computer all day.

-Hostage

Typically there are also some insurance costs for liability and E&O policies.

I would just find the names of other contracting houses that the large company does business with and approach them with your situation.

 

[greenbush future]

Re: negotiating with contract houses?

I am a head hunter and we place folks in the IT world all over the US. In general you should be able to get about 80% of the bill rate (that's the rate the staffing company charges your boss). It would be in your best interest to get off the W-2 thing so you can actually get more of your hourly rate. And for what it's worth any staffing company that will allow you to go 1099 is who you should consider. But like you said not all will do this. But when you go 1099, the burden (cost)for the staffing company goes way down. Talk with your CPA or tax person to set this up effectively, and even decide if this model works well for you, it does for most, but there are tax ramifications you should be aware of. Most of my seasoned guys are all 1099. You are actually in a very good position, do your homework and select the shop that offers you the most. Make sure it's apples to apples and you should end up getting a little bit more than you do now.
If you think about it, the new shop has very little invested, we call these "blue birds" in the consulting world. And with no bennies needed, you can actually ask for more hourly, any shop that wont, most likely is not who will pay you the most. Take your time deciding.

 

[avenger79]

Re: negotiating with contract houses?

I agree and that's why I suggested setting up a "company". It's not that hard to do and he can get a million dollar umbrella insurance package pretty cheap if it's just him. That's what most companies require in order to "qualify" as a contractor. He might also talk to the old contract company and ask them what the requirements were.

true, but that is one of the reasons why bigger companies are going to the "approved list" of contract shops. Lots of employees were doing just that, especially in the days when good employees were hard to find. It was a great way to pad your pocket book by an extra 20-30% or more.
One company I worked for would only use one contract house and what do you know, they owned it. Was just a way to keep a constant flow of employees without paying bennies.

 

[Eric 3.7LX Alpha 1]

Re: negotiating with contract houses?

I agree with Bubba... try and become your own contract house, at least find out what it takes to do it.

As far as employment taxes are concerned... I pay the exact same SSI and Medicare as my employees, Match their payment 100%,

SSI= 6.2%

Medicare=1.45%

MA state unemployment= 11.01 (until employee reaches $14,000.00 then $0.00)

Federal unemployment= .6%

Comp for $100,000.00 gross plumbing salary= $3,800.00

workers comp is a percentage of gross salary but it depends on your profession, and your likelihood of getting hurt on the job.

The same goes for Unemployment... likelihood of getting laid off