I’m always looking for new opportunities. It comes with the territory of being a consultant. Over the past year or two, something “new” has crept into the recruiting world. I find it incredibly disingenuous. While many people will just accept it as “status quo”, the reality is the only way to combat the situation is for consultants and job-seekers alike to refuse to apply for these positions.
The new “buzz-phrase” is, “All Inclusive W2 Contractor position.” The reality is there is no such thing. Let’s break it apart, shall we? The best way to look at it is to use an example.
So a “recruiter” calls me up and says, “I have a position. It pays $100.00 per hour All Inclusive W2 and it’s in <insert name of state>.”
I normally charge that rate anyway depending on the type of work it is. Here’s the rub.
All Inclusive means I pay my travel expenses. So let’s assume it costs $500.00 for a round trip ticket (although it can cost more depending on the time of year). That’s 4 round trip tickets a month or $2000.00
Let’s look at hotel stays: 16 nights a month * 100 = 1600.00 per month (these fluctuate wildly as well)
Car Rental: $50.00 * 20 = $1000.00 per month
Gas: $200.00 per month (to refill gas)
Food: $500.00 per month (you’re eating out unfortunately)
Now, we’re up to $5300.00 per month in expenses.
Let’s use that number as the baseline expense figure: $5,300.00 per month
You Gross $100 * 160 = $16,000.00 per month
Normally, it might be acceptable, except for one thing.. It’s W2.
So, let’s take taxes out of that $16,000.00 per month you’re making.
Monthly Gross Pay$16,000.00
Net Pay: $10,986.19 and I’m in Florida where there’s no State Tax. Imagine if you had State Tax!
So we deduct our expenses from the net pay and we get: $10,986.10 – $5300.00 = $5,686.10
Divide that by 160 hours and you get: $35.54 per hour.
As if that doesn’t add insult to injury, the “recruiter” is holding your money on a NET 30 term payment cycle.
That doesn’t mean you get paid in 30 days. It means you bill them in 30 days and get paid 30 days after that! So you’re going to be waiting 60 days to get paid.
See the problem? It gets worse. You’re a W2 employee. There is NO WAY you’re going to be able to claim those travel expenses properly on your taxes without raising multiple red flags. So congratulations, you just got taken to the cleaners while the “recruiting” firm made out by being able to claim you as an employee, because you’re W2.
It’s a disgusting practice. Here’s the thing: Not all recruiting firms are like this, but the majority of them out there pull this on people all the time. The employers allow for this as well. If you ever hear those words, “All Inclusive W2”, run far away from those recruiters as you’ll only end up hurting yourself in the long run.
The general rule of thumb is: 1099 or Corp-to-Corp with travel expenses as a separate item.
That’s the way it used to be and that’s the way it needs to be again. If consultants don’t band together and start turning down these types of contracts, it will only get worse over time. We need to stand together and stand tall. The concept of a job is to actually make money, not go deeper into debt. This will not affect the recruiters that are looking to make an honest living. It will only affect the ones that are trying to pull a fast one on their candidates.
Good Recruiters are hard to find. When you find one, recommend them. They should be rewarded for doing their job properly and having a good sense of ethics and morality.