More Jobs Shifting from Full-Time to Contract

Five Ways to Manage the W-2-to-1099 Transition

More Jobs Shifting from Full-Time to Contract

By Larry Buhl, for Yahoo! HotJobs

Today, many career opportunities that once came with a W-2, full benefits and the promise of a long-term relationship now come with a 1099, zero benefits (except for free coffee) and the understanding that you'll only stick around for the duration of the project (if you're lucky).

That's because companies that have implemented hiring freezes still need experienced people to get the work done. Exit the employee, enter the contractor.

Contractors Are Here to Stay

"The trend of replacing employees with contractors has been going on for a while, and it's really where the opportunities are in this economy," career coach and author Deborah Brown-Volkman says. "The trend will likely continue because it works out well for the company. They don't have to pay you more, they don't have to pay your health insurance, and they use you only when they need you."

The good news is contract work will never fully replace traditional employment. The better news is many newly minted self-employed professionals -- also called contractors, consultants and name-the-profession-for-hire -- actually prefer the freedom and variety of self-employment.

Career counselors have this advice for navigating the quasi-employee landscape of the 1099 worker:

Save, Save, Save

You'll have to pay your own health insurance. And you'll need to save for the lean months when you're between projects (contract workers aren't eligible for unemployment insurance). And as for retirement, you're on your own. Don't assume that you'll be earning a higher hourly wage than an employee in a similar job, either.

Always be Networking

Career coaches encourage professionals to always be looking for the next job, but networking-autopilot is absolutely essential for contractors and freelancers. "Even when you've landed a good contract assignment, let your contacts know where you are and that you'll be available for work when the project is over," says independent career counselor La-Dana Renee Jenkins.

Consider Yourself a CEO

"You're in business for yourself," Brown-Volkman says. "You are a company, so you need at minimum a bio, business cards, and a Web site with your projects and accomplishments." And don't stop the networking when you arrive at a job site. "Build relationships with as many people inside the company as possible," she says.

Be a Team Player

Though it seems like a contradiction, you need to think of yourself as both a CEO and an employee, at least when you're on the job, Jenkins says. "If you really want a full-time job you will have a leg up with the company as a contractor, but only if you prove you have been a value to them," she says. But if you do want full-time work, be clear about your preference, Jenkins added, to avoid getting pigeonholed as temporary help.

Take Advantage of Resources

There has been a growing awareness that self-employed and contract workers are a vital part of the economy, and a commensurate rise in resources to help them. There are inexpensive healthcare plans, which vary from state to state. There is also a national freelancers' union, with support for legal, job search, healthcare and long-term career issues.

Is It Right for You?

Most employment in the US is at-will, meaning an employee can be fired at any time for any reason. However, with traditional, full-time employment there is an implicit agreement that the relationship will continue unless the company or the employee falters. With contract work, a company is under no obligation to keep a worker beyond the six weeks, six months or two years agreed upon in the beginning (but companies can cut a contractor loose even sooner). For those reasons, people who value security and routine above all else should make a full-time job their goal, Brown-Volkman says.

But in this economy, even if contract work isn't right for you in the long term, take it. "You'll earn money and gain experience, have a variety of networking opportunities and you'll gain more confidence in your chances of finding a job when you're already working," Brown-Volkman says.