Contract Employee Vs. Direct Hire


Contract employees work for businesses on a project basis and may control how, when and where they work. A direct hire employee performs services for a business and has no control over the details of how those services are performed.

Time Frame

  • Contract employees work with a business for a length of time determined by the terms of their contract. Direct hires work for a company indefinitely unless they quit, get laid off, or are fired.


  • Contract employees are self-employed so they pay for their own taxes and benefits. A business takes care of taxes and may give benefits to direct hire employees.


  • Direct hire employees help businesses provide efficient service for their customers. Contract employees work with businesses on overflow or outsourced work.


  • Direct hires receive a regular paycheck and have set work schedules. Contract employees control their own time, can negotiate their rate of pay, and can write off some of their expenses on their taxes.


  • Self-employed contractors pay taxes on a quarterly basis, so they should meet regularly with a tax professional to find out which records to keep and which taxes they need to pay.

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