Ask HR: W-2 Contract-to-Hire Person

Dear HR,

Have you heard of a W-2 contract-to-hire person?

It was mentioned that to better protect ourselves, even though we have at-will employment and our health insurance policy will have a 90 day wait period, that we should hire all new employees as W-2 contractors and that at the end of 90 days review for conversion to employee hire.

I’m confused…please help!



We have heard this term offered by our clients over the years. The term ‘W-2 Contractor’ is an oxymoron. W-2 forms are given to employees, as defined by the IRS.

Employees have certain rights and duties. Normally consultants/contractors don’t work for only one customer for a long period, and they have a leeway into how they perform their tasks, they also buy their own equipment. Some employers will use term ‘Contractor’ or ‘Independent Consultant’ in a job posting but then later note that it is a W-2 position. The intention is to give the applicant a clear impression that it is a temporary engagement (three months, for example), and that after that term there is no sure employment.

This does not provide you any more protection than the ‘at-will’ protection. There could actually be an argument that this requires you keep the employee for the entire three months.

Our recommendation is always to just simply ensure that you have an in-depth review with the employee at the end of their 90 day period. If they are not performing at the expected level then you have the option to terminate the employee.