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Indirect Contractor to Direct Contractor

Greetings - question for you...
I do some "side work" (10 hours per week) supporting sharepoint for a company.  I got this gig through a recruiting firm, who collects my hours and timesheet each week, then deposits the funds in my account on Friday.  Since starting this gig, I've now gotten some other clients as a direct contractor (ie. no help from a recruiter, just direct through me as a 1099 under my own "doing business as").

To the point - the manager at the side gig had previously tried to hire me, but it didn't work out.  This is how he came to have me help him on the side till he finds a full time person.  In the meantime, he's been looking for a full time person, but still hasn't found one that's a good fit.  Some of our recent discussions have bordered on the topic of possibly going direct to me instead of the recruiting firm.  This is a NO-NO due to the no-compete terms which require me to not compete with the recruiter for 1 full year.  There are, however, clauses in the no-compete for when the client wants to hire me as a full-time employee, but nothing about hiring me as a "direct" contractor.  

Has anyone been presented with this scenario (Contractor through recruiting firm wanting to convert to DIRECT 1099 contractor to the client) before?  My default is to just continue working through the recruiter and not stir up the hornets nest of contract law.  I was however, wondering if anyone else ever went through a scenario, and was able to buy out (or have the client buy-out) their contract with the recruiter much like what would happen if the client hired me as an employee.

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Hi Aman, thanks for chiming in.  Question about your "boat."  

1) Do you have to wait 1 year with NO CLIENT CONTACT, then your no-compete expires?  .....or

2) Can you be doing work for 1 year with that client (through the middle man), then after 1 year flip over direct overnight?

I believe mine is the former, and it's what I told the client manager.  Of course, this means that it's hopeless in the short run as most people cannot look out as far as 1 year, and think they'll hire someone else by that time.  Reality is 1 year flies by pretty fast.

Anyway, which is yours?


Hi crmsharepoint,

             Sorry I didnt see your comment before.

 >> 1) Do you have to wait 1 year with NO CLIENT CONTACT, then your no-compete expires?
        No, 1 year non compete means, I cant join Client directly without giving him services for 1 year through the middle vendor.

>> I will work for 1 year, and as soon as I get done with 1 year/2000 hrs, I can join client the very next day.

     You are right, 1 year flies by very very fast :)
Having used to work for a recruiting agency - I'd say you probably have some options related to joining your direct client on a F/T basis or through 'Direct 1099' as you mentioned.

Some companies offer the option for a contractor transition to a FTE (Full time employee) before completion of the contract through a buy-out that is usually around 20% of the full contract value.  Depending on the agency's mark-up on top of your hourly rate and the length left on your individual contract this might be a more economical option for the direct employer.  

There are lots of recruitment companies and every one likely has different terms and conditions included in their contracts.  Depending on how urgent the matter is to you personally, it might also be worthwhile to consult a lawyer to explore your options from a legal standpoint.

Hope this was helpful!