How much should I request when moving from contractor to full-time employee?

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Right now as a contractor you bear the full cost of everything. They will be sharing some of those costs when you become an employee.

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This doesn't apply to me, I'm not 1099. I'm a full-time employee of one of the contracting companies that is one of the middle men. So both middle men charge the fortune 500 company higher rates than what I'm making.

I'm making these numbers up but let's say I make $150k, the company I work for charges the top tier contractor $172k a year, and then that top tier contractor charges the fortune 500 company $190k a year.

We recently had 2 contractors who come form similiar situations as you describe. We paid a set hourly rate and the contacting company empoyee the person and provides that person with benefits they determined to offer. We had no say in thier pay rate or what benefits they were offered.

Well recently we decided to eliminate the contracting agency. We offered both contractors full time positions, with full benefits and retirement. Their hourly pay rate..went down!!

So your thinking may be a little off as a previous poster stated.

Negative!!

Employees hourly rate went down $0.50 when transfered from contractor to full time employee.

Upward mobiblity and stability as full time employee was worth the decrease to these individuals.

That's what I thought. I assume they are charging anywhere from 40-50% more on top of my base.

I'm going to put in for 12% increase and hope they either accept or counter for no less than 5%

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Full time employees cost the company a lot more when you add benefits (vacation days, health insurance, stock options, bonuses, 401(K) matching and other perks). Sometimes the benefits add up to as much as your base salary itself.

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Agree. For example, my company matches $ for $ 401K up to 9%. Add in health insurance, dental, paid vacation & personal time, short term disability, long term disability, company paid life insurance, and other benefits, I would think the norm would be a reduction in salary. Maybe I'm totally off base though....

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I think this would be the case if he was currently being paid by the company he is going work for, but that isn't the case.

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Not completely true. They are already paying for him.

Let's use the numbers the OP used. He said the end client (the Fortune 500 company) is paying $190K for his postion, which turns out to be: $190,000/(40*52) = ~$91 per hour. But if they hire him full time, do you think they will offer him an annual salary of $190K? I think not. Because they still have to pay for his vacation days, health/dental/life insurance, 401(K) etc now that he is a full-time employee. If they offer him a salary of $190K, all his benefits will be on top of that making him much to expensive to hire as a full-time employee than as a contractor.

A senior director at my company once said, even thought engineers under him make about $100-120K in salary per year, it actually costs the company closer to $200K to employ the person when you tack on all the benefits. Believe it or not, they even look at stuff like cubicle space, laptops, company paid cell phones etc. when considering the overall cost per head count.

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Just my opinion but I think you're looking at it backwards. Their associated costs will go up when you become an employee. Right now as a contractor you bear the full cost of everything. They will be sharing some of those costs when you become an employee.

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This. I pay my contractors more than I pay employees.

He should definitely make more working direct


The company may be paying him less per hour than they originally paid for him (even after adding benefits), essentially because they were already paying for his wage, benefits, and the cut of two different firms

By eliminating those two cuts, he should have some wiggle room no doubt

Even though indirectly, the F500 company was always paying for his benefits, contract or not