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Salary to Contractor????
3

Salary to Contractor????

Salary to Contractor????

(OP)
So I got this new job offer starting off as and Autodesk Inventor design engineer and supposedly working into FEA and engineering as I learn. I really like the company, and really want to get into the field of work.

The problem is that they want to pay me $18/hr and hire me like a contractor for the first 3 months. Then depending on my performance I would get a pay increase between $23-25/hr and some health insurance contribution.   

Of course this is a large step back from my salary and full benefits, but what I want to get into more CAE.

I asked the manager if they could at least mach my health plan and try to get closer to what I make now. Should you take manger pay cut when changing jobs because they will be “training” you for the first 3 months?

I guess the other question is, isn’t $23-$24/hr more reasonable for drafting as a contractor?

RE: Salary to Contractor????

Depends where you are but $18hr for a drafter/designer isn't unheard of.

In SoCal just 3 years ago or so when I was looking they had designer/drafter jobs offering $15.

That said, the word Engineer is in the job description soyou might hope for a bit more, but exempt sometimes plays fast and loose (at least by US standards) with who gets to be an Engineer.

2 thoughts:

1: Can you afford to live at what you consider an acceptable standard on $18 or what ever they end up paying?  

2: "supposedly working into FEA and engineering " These things have a habbit of not working out, not saying that's the case here but there's no guarantee.  

KENAT, probably the least qualified checker you'll ever meet...

RE: Salary to Contractor????

(OP)
Well,

Ans 1) I have a really well developed excel budget smile, and I can live off $18/hr but I can't afford comparable insurance. I myself would live w/o insurance but my family lives off my insurance.

Ans 2) This is my other consern, I have a friend working there that said the boss was strait, but its a hell chance to take.

RE: Salary to Contractor????

Around here, contract positions almost always pay much more than straight salary hours. By hiring you as a contractor, they can kick you to the curb quite easily, though that holds true in "at-will" states as well.
While the training is nice, being without insurance wouldn't be. Can you get them to pony up a "signing bonus" to help you cover COBRA benefits? (you're talking in $$, so I'm assuming you're in the US).
Also, I find it hard to believe that a company will give you a $5-7/hour raise after some training. In your case, that would be ~30% raise. I'd be a little wary.
I don't mean to be a downer here, just playing devil's advocate...

Jeff Mirisola, CSWP
Certified DriveWorks AE
http://designsmarter.typepad.com/jeffs_blog
Dell M90, Core2 Duo
4GB RAM
Nvidia 3500M

RE: Salary to Contractor????

Well then, unless you're actually unhappy/dissatisifed/likely to get laid off or whatever at your current place, I'd probably stick around and wait for something better to come along.  

The insurance would probably be the decider for me, though having lived in the UK till a few years ago I'm not sure I've really got the hang of it being an issue. Can't see me letting my wife or kids go without, heck not sure I'd want to go without and land them with bills or get sick and not be able to support them.

There may be other ways for you to get exposure to more CAE, maybe some college classes or something.  Others may have more ideas on how you can get into the area without taking what sounds like a big effective pay cut when you take benefits into account.

However, there are also posters here who have the 'follow your dream' mentality, maybe their right, what would I know I'm an engineer not a philosopher or psych major.

KENAT, probably the least qualified checker you'll ever meet...

RE: Salary to Contractor????

Follow your dream!

But get everything in writing whenever you can.

RE: Salary to Contractor????

If you're hired essentially as a subcontractor at a fixed hourly rate, the company does not pay any fringe, and probably no overhead for your work.

If you were truely what I refer to as a subcontractor, YOUR hourly rate would include burdens for YOUR fringe and overhead.

Seems to me that the new company is getting you at a very reduced rate for a few months, afterwhich they will be abe to decide if they really want you as a full time employee.  In other words, if they decide they DON'T want you as a full time employee (say due to poor pereformance, or perhaps reduced workload), they simply don't issue a new subcontracting agreement.

This is a great arrangement - for the company, that is. They get your services at essentially below market rates, with zero obligation or risk on their end.

I would query WHY they won't make you full time, and at a minimum request and receive a salary increase.  You could reasonable request a salary nearly equal to the company's true cost if you were full time [paying you essentially for benefits, including vacation and holidays],  and the company still incures zero risk should you not perform as expected.  You could even then agree to a "mid-point" salary.  This, of course, requires you to make a guess (or investigate and ask others) of the typical fringe and overhead burdens used by the company.

Good luck, and don't take all the risk and sacrifices yourself - they should be shared.

RE: Salary to Contractor????

$18hr seems low to me, but it is dependent on where you live.  Geographically, where is this job located, in a major city or away from one?

Whatever you decide, get everything in writing, and don't be afraid to ask for it before you make-up your mind.

"Art without engineering is dreaming; Engineering without art is calculating."

Have you read FAQ731-376: Eng-Tips.com Forum Policies to make the best use of Eng-Tips Forums?

RE: Salary to Contractor????

(OP)
mshimko,

The owner told me that the reason for the cut was a) because they will be training me for the first 3 months
b) Too show my commitment, he stressed that a lot, I assume he got burned by someone and now is paranoid.

M^2 – I live in the Buffalo NY area… I want to get out cuz the area is dead and still dying and most companies use that as an excuses to treat people like $h!7 !!!…I could write a book about the stupid dynamics of the area…but that’s it in a nut shell. The problem is you need money to move, or get a good job offer that will foot the bill.

RE: Salary to Contractor????

Gymmeh,

In the current economic I would be very cautious to go on such a route. The USA economy is heading towards a recession or at least media says so.

In these circumstances what about the income source stability in years to come? The excel budget seems fine for now but the cost of living is rising slowly too and thats not the end? Do you think this is right time to go after the dream?

Just my doubts.
Good Luck.

Siddharth
These are my personal views/opinions and not of my employer's.

RE: Salary to Contractor????

In my area (NW New Mexico) Oil & Gas roustabout truck pushers (3-6 months experience, some High School) make over $18/hour, and Pumpers (a couple of years experience in a related area) are making $25/hour.  Office guys make more.  New Petroleum Engineering Graduates are getting upwards of $100k/year with zero experience.  

My point is that supply and demand are truly local phenomena.  If you think that Buffalo is a dying economy  then there are other places that may have a lot of life.  You just have to decide what your priorities are and go for them.

David

RE: Salary to Contractor????

$18/hr seems horrifically low, particularly as a contractor.  A typical wrap rate is 150% to account for bennies, taxes, etc.  That would put your equivalent salary at about $12/hr, which is not much.  You'd be making less than many secretaries.

I don't recall what your background is like, but I think that you're being taken advantage of...  Your OP states "a pay increase between $23-25/hr " which would put you at $41/hr, which is much more reasonable.  

Again, mileage may vary, but we usually wind up paying about 150% the salary of a FT employee for a jobshopper.

TTFN

FAQ731-376: Eng-Tips.com Forum Policies

RE: Salary to Contractor????

(OP)
They linerally just invited me back for another interview.

So Hopefully this is enough ammo to either get a better offer or run like he11!.

Thank you all, I will let you know what happens!!!

RE: Salary to Contractor????

Are they already using an FEA program? Or is this something that will be purchased later? What kind of training will you receive? From coworkers? Classes? Self-Study? I think you should find out some more before taking such a low salary. If I were hiring someone at such a low salary (assuming that I could stoop so low) I would really doubt that they would stay for long. And if I was a really devious fellow, I would find some way to con them into staying for a while (like promising something tangible down the road).

RE: Salary to Contractor????

Sorry, maybe it's just me, but I don't understand the logic in:

"we will pay you less, because we are training you."
"we will pay you less, to see your commitment."

Your training benefits the company, so why should they pay you less for this. If they want you to see your commitment, maybe they should pay you more not less.

RE: Salary to Contractor????

2
$18/hr is low.

Danger sign number two is that you will be "working" into engineering and FEA.  Signals that the firm does not really take engineering or FEA seriously as professional disciplines.

RE: Salary to Contractor????

good point, Tick, Star for you

RE: Salary to Contractor????

Ask for $40/hr.  

That's less than what they'd pay a job shop for someone who can drive Inventor, never mind FEA.


Mike Halloran
Pembroke Pines, FL, USA

RE: Salary to Contractor????

Sounds to me you will be taken for a 3 month joy ride.wink  I did some contracting work through an agency and easly got $35/hr with medical.  I bet the agency charged $70/hr for my services.

What type of training?  Is this formal Inventor training or OJT?

Heckler   americanflag
Sr. Mechanical Engineer
SWx 2007 SP 4.0 & Pro/E 2001
      o
  _`\(,_
(_)/ (_)

This post contains no political overtones or undertones for that matter and in no way represents the poster's political agenda.

RE: Salary to Contractor????

(OP)
It will have OTJ training and they will have a guy set to speed up the training.

from what everyone is saying, unless I get $40-$50 an hr as a contractor, this is just another case of...like I said earlier...

"… I want to get out cuz the area is dead and still dying and most companies use that as an excuses to treat people like $h!7 !!!…"
 
sad Such a bummer...

RE: Salary to Contractor????

I wouldn't do it.  Our contract engineers make 5x to 10x that, in large part BECAUSE they don't get benefits.  That guy is taking advantage of whoever will accept it, and not many will.  He wants to "see how committed you are" without showing you any commitment...forget it.

RE: Salary to Contractor????

Gymmeh, best wishes and good luck

RE: Salary to Contractor????

Figure out what you are worth and dont settle for less.

RE: Salary to Contractor????

For Gymmeh:

I would use the points I mentioned above to negotiate a higher salary while not being hired as a permanent full time employee. This reduces his risk, but doesn't leave you hanging by yourself.

Heck, agree to meet him "half-way".  A fair and reasonable burden for fringe and overhead is 80%-100%.  Mention this and suggest a 50% increase.   He will still be getting your services at "below market rates" with zero risk to him.  If he won't budge, I'd avoid the place.

RE: Salary to Contractor????

I cannot speak about the USA but in the UK a three-month trial is normal and you have little rights above that of a contractor anyway.

You say you are in an area/ industry that is going through hard times but cannot afford to get out. I know this sounds hard but you need to do something about this and it will involve making a hard decision one way or another or just hang around and hope that things get better.

If you try looking at the situation as someone is prepared to train you and pay you, albeit a very poor wage, does it seem a better proposition?

If you look at this as an opportunity and work really hard for the next six months would you be in a position where you could become invaluable to the company or at least be able to apply for other jobs that posters claim pay 10X this amount?

Is it worth taking a short term hit for a long-term gain and if not how else could you change the situation you are in?

RE: Salary to Contractor????

18/hour?!  for an Inventor designer?  And contract on top of it?  I would tell them where to stick it ;)

Generally contract should make more.  I have used Inventor in the past and none of our permanent guys made less then 20/hour with full benefits.  This is in S.E. Michigan.  And it was a cheap company.  Heck, my wife made 40k year with no degree or experience answering tech service calls 10 years ago.  at the same time I was making about 37k w/full benefits doing basic drafting.  Where are you moving?

It might be worth the chance simply because you can learn FEA.  I would try to get everything in writing.   As someone said follow your dream ;) I would like to learn FEA.  At least in the end you can take that training and go elsewhere if they don't follow through.   And make sure that when they say pay increase that the 20/25 an hour is on top of your regular rate.  I would get it in writing.

Make sure that wherever you are moving has other jobs in the area with similar industry.

RE: Salary to Contractor????

(OP)
cksh, I have been looking to a larger urban area, I really don’t have any preference other then the place is in the north cuz I like snow.

I belive in flowing my dreams, but not digging myself a hole while doing it.

RE: Salary to Contractor????

If you make enough money, you can fly to the snow when you want to play in it.

Mike Halloran
Pembroke Pines, FL, USA

RE: Salary to Contractor????

Maybe gymmeh is applying for a local position in Mexico...
Are you sure that it is in US?

RE: Salary to Contractor????

(OP)
LOL, thanks Medicine, I needed a laugh

RE: Salary to Contractor????

I don't know if this has been broached but hiring you as a contractor is probably going to be looked at unfavorably by the IRS.  A company cannot designate an employee as a contractor just because it is convenient.  If you are using the company's equipment, insurance, office, have fixed hours, in other words, treated like any other employee, then you are an employee not a contractor.  This knowledge might be useful in your negotiations.  Use it like you are doing them a favor by pointing it out.  "I would love to contract for you but......"

As far as the hourly rate, It's ridiculously low as stated by others.  You should be getting at least 1.5 times a regular employee hourly rate and paid for all hours worked.

RE: Salary to Contractor????

The only thing that the IRS has ever really been able to do is when "temporary" contractors work for years on the job.  Anything in the 3-month range is probably unassailable.  Somewhere in the 6 to 12 month timeframe, the IRS starts getting interested in whether the company is trying to avoid paying payroll taxes and the like.  

TTFN

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RE: Salary to Contractor????

OK IR but that's just a technicality. The fact is that they are most likely violating IRS guidelines.  Because the IRS is too busy to check on short term contractors doesn't mean what they are proposing is legal.

The OP can still object to contractor status because he does not meet IRS guidelines.

Here is a form that the IRS uses to determine if a worker is an independant contractor.

Http://www.irs.gov/pub/irs-pdf/fss8.pdf

Although it does not give conclusions I think it can be seen from the type of questions that the OP is not a contractor.  Hell, Just the hourly rate is enough for me to conclude he isn't a real independant contractor

Also, bear in mind,  as a contractor he will get a 1099, have to pay his own taxes, SS (which is an additional 6.3% more than an employee, worker's comp etc.

I am not suggesting he uses this as his primary negotiation, just have in his back pocket so he can subtley throw it out there for consideration.  Might tip the scales in his favor

RE: Salary to Contractor????

(OP)
wow, this deal is starting to look really bad...

the problem is that when i go there and ask for almost twice what they originally offered they will probably tell me where the door is.

Before I go in for another interview should I email them with my concerns and what would be a more reasonable rate? Or is that asking for to much?

RE: Salary to Contractor????

If you really want the job I would approach it like the $18 is "in your pocket" (Before income tax).  Even this makes me cringe, but so be it.  

In other words they make you whole for all the "extras" SS, Worker's comp, insurance etc.  Then tell them since you are "contract" you are not on salary and want to get paid like a contractor, i.e. for every hour you work.  Then if you are feeling really brave, tell them "of course overtime is time and one half or double time as is customary for contract work" then watch their faces, if they drop, quickly say "just kidding"

winky smile

RE: Salary to Contractor????

The IRS form, and the this page: http://www.irs.gov/govt/fslg/article/0,,id=110344,00.html relate to an INDEPENDENT contractor, which isn't necessarily the case here.  So long as the company does not claim that you are a independent contractor, they're fine, although, they would then incur the same tax liabilities as if he were a normal employee.

That might be fun.  Print out the IRS page from the link above and ask your new "employer" if your position is an "independent" contractor or not, and if they answer yes, show them the article, and ask them if that means they're going to pay your SS and unemployment taxes, and if they are going to do your Federal withholding.

TTFN

FAQ731-376: Eng-Tips.com Forum Policies

RE: Salary to Contractor????

(OP)
nice... get them thinking!

I have come up with basically three proposals.

1) Hire me full time right off the bat with benefits at $18
with written guaranty of review and  min raise upon positive review of $23.50/hr.

2) Signing bonus of $3000, to pay or COBRA, till they hire my full time. And $18/hr

3) Treat me like a contractor at ($35/hr) NO less then $32/hr


Obviously I want option 1 cuz it is less hassle for me.

RE: Salary to Contractor????

(OP)
SO…I went in for the interview and turned down the offer because they would not match my job.

They called me the other day saying they want to revise the offer to match what I make now, job title, and match benefits, with salary review within 3 months for a raise.

I think I am going to take the job, even though it is technically “lateral” movement, making a complete industry change to move into a place with 4 engineers doing valve and gage design.

Thanks for your advice! If you still think I am really crazy… let me know in a hurry!

RE: Salary to Contractor????

Good luck! And make sure you get that salary review in 3 months IN WRITING.

V

RE: Salary to Contractor????

(OP)
VC, already done!

RE: Salary to Contractor????

Glad to see you come out OK.  

In a way, this is just like playing poker,  where the company knows part of what you are holding.  Your challenge is to ID as many of HIS cards (and the other players) to even to odds or even give you an edge.  After that, it's a matter of how you present your case, and be willing to walk away.

Come to think of it, this is identical to negotiating a new car!

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