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Every single minute of a freelancer’s time is billable to a client. The agency doesn’t have to float the cost of your vacation, sick time, or benefits. So even though you make more, the agency is recouping more of it on the back end. Plus, if you’re working from home they don’t need to cover the cost of your desk, your coffee, or your technology.
They’re just lazy. Doesn’t come down to anything more than that
you can cut “permalance” people whenever you feel like it, but full-timers are expected to be kept on even during slow times, in expectations of more work. if they can justify the money, or break even as if they were full-time, they do it, because there’s no commitment.
I know about 10 years ago permalance got the shakedown from Spitzer...who made basically rules.. but not exactly laws..
It's basically a shell game for the books on companies that trade. They often use another company to pay to make it appear as though it's not the main company blowing cash.
BBDO (and probably Omnicom) will generally kill you off at some point after about a year and will low ball the hell out of you with an offer about 30-40% less then you made before. They'll let you go immediately if you don't accept. I think they know when the audits are coming.
They technically have to claim you as an employee if they cross these lines... bring it up and watch a lot of people start to get nervous though....
Your employer gives you company equipment to complete your work.
You have to get prior permission to take a day off.
You spend all your time working for one company—likely you don't have the time to work for anyone else.
You submit oral or written reports to our boss.
Your employer trained you for your position.
Your employer bought, trained and supervises your lovely assistant.
You have your own work station on company premises.
The business couldn't maintain its success or performance without your services.
You're reimbursed for expenses.
You've been instructed where, when, or how to complete the job you've agreed to.
Full time is an overhead expense; freelance is an operating expense. It’s all part of the accounting gymnastics the big agencies do when reporting profits and losses.
It’s all in how an agency is structured financially. Freelancers make the most sense when the revenue is unpredictable (i.e., new clients, project, fluctuating spend/workload). Layoffs can impact morale and retention whereas freelancers leaving is a normal occurrence. And as an earlier comment stated, full time employees cost a lot more than their salaries, both financially and resource-wise. You don’t have to manage and mentor a freelancer
Given that full time contracts can basically still be broken whenever, and that they save money having me on staff, why do some agencies seem comfortable letting creatives freelance for years at a time?
Am I missing something on the back end? Do they just really like the talent and think they’d lose them otherwise?
There’s also hidden taxes they pay to have people staffed, and benefits. As a freelancer we have to pay the self employment tax, but at least it’s deductible.
I love the agency I’m at right now and I adore the team I work with, but I’m freelance and worried I’m never going to have health insurance again.
Freelance money comes from a different pot of money than the salary money. (Justified by workload and paid for out of the individual job )
Permalance is not easy to find these days (not counting pharma). Good for you. Enjoy the bucks!