What Is a Permanent Employee?

If you work a job that doesn't have an end date and you're on your company's payroll, chances are you're a permanent employee. A permanent employee is someone who's hired by a company and receives an hourly wage or salary. In this article, we'll cover the difference between a permanent employee and a contract employee and how being a permanent employee affects your finances.

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W-2

A W-2 is a tax form filed each year with the IRS by an employer that contains the information you need to file your taxes.

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Some of the drawbacks include:

Less control over your schedule: When you're a permanent employee, you'll likely work a schedule required by your employer. Contractors have far more control over their schedules.
Restrictions on outside employment: Employers are much more likely to restrict you from pursuing other job opportunities if you're a permanent worker. For example, some companies prohibit employees from working a second job or starting a side business, or they require a non-compete agreement as a condition of permanent employment.
Earnings may be limited if you have in-demand skills: If you're highly specialized in your field, you can often earn significantly higher hourly wages as a contractor than as a permanent employee.

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About the Author

Robin Hartill, CFP, is a contributing writer at The Motley Fool. Robin’s work has also been published by Yahoo Finance, USA Today, and Penny Hoarder. She is a graduate of the University of Florida.

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