Top Trends and Terminology of Contract Work

Welcome to the dynamic world of contract work, where flexibility meets opportunity, and professionals take control of their careers! The realm of independent contracting, freelancing, and consulting has experienced explosive growth in recent times, with an astounding surge in the number of independent workers in the United States. The need for comprehensive knowledge about the terminology and trends of contract work has never been more critical. According to LinkedIn research, the share of paid job postings for contract positions on LinkedIn – out of all paid job postings in the U.S. – has increased by 26% compared to the same 6-month period from the year before. In comparison, the share of job postings for full-time positions has only increased modestly (by 6%) in the same time range compared to a year ago. 

The remarkable surge in contract work emphasizes the need for dedicated resources to educate about the terminology related to it. This blog post will unravel the essential terms, such as the Statement of Work, Bill Rate, Mark up, and more, that every contract worker must understand to thrive in this competitive landscape. We’ll also review the trends shaping contract work, including the continued rise of the Gig Economy, the impact of talent platforms, and the transformative role of technology. 

Contract Workers Terms

Statement of work (SOW):

The Statement of Work (SOW) is a fundamental document in contract work that defines the scope, objectives, deliverables, and timelines of a project. It acts as a comprehensive guide outlining the specific tasks and responsibilities of the contract worker. The SOW is a crucial agreement that ensures both the client and the contract worker are aligned on the project’s goals and expectations. It serves as a reference point throughout the project’s lifecycle, minimizing misunderstandings and disputes. 

Bill rate: 

The Bill Rate is the rate at which the client is billed for the services provided by the contract worker or the contracting agency. This rate can be either hourly or project-based, depending on the nature of the contract. The Bill Rate includes the contract worker’s compensation, which is often based on their skills, experience, and the complexity of the project. 

Mark up: 

The markup refers to the difference between the Bill Rate and the Pay Rate of the contract worker. The Pay Rate is the amount that the contracting agency pays the contract worker for their services. The markup is applied by the contracting agency to cover its operational expenses, including administrative costs, employee benefits (if applicable), taxes, and potential risks. It is important for contract workers to understand the markup as it affects their total compensation. 

Mark-up policy: 

The Mark-Up Policy is a set of guidelines and rules that govern how the Mark-Up is determined for each contract or project. This policy may vary between different contracting agencies and can be influenced by market conditions, the level of specialization required, and the duration of the contract. It is crucial for contract workers to be aware of the Mark Up Policy to have a clear understanding of how their compensation is calculated. 

Master service agreement (MSA): 

The Master Service Agreement (MSA) is a contractual agreement between the client and the contracting agency. It lays the foundation for future contracts between the parties by establishing general terms and conditions that will govern all subsequent projects. The MSA streamlines the process of entering into new contracts, saving time and effort by avoiding the need to negotiate terms for every individual project. 

Right to hire or direct placement: 

The Right to Hire or Direct Placement clause outlines the conditions under which the client can choose to hire the contract worker as a full-time employee after the completion of the contract. This clause can be advantageous for contract workers who are seeking potential permanent employment opportunities. However, it is essential to carefully review the terms, as the decision to convert to a permanent employee may not always be in the contract worker’s best interest. 

1099 vs. W-2: 

The classification of contract workers as either 1099 or W-2 refers to their tax status and the employment relationship. A 1099 contractor is considered an independent worker responsible for paying their taxes, while a W-2 employee is on the payroll of the contracting agency or client, and taxes are withheld from their paycheck. The classification has significant implications for tax responsibilities and benefits eligibility, so contract workers must understand their classification accurately. 

Employer of record (EOR): 

As it relates to your tax status, knowing your EOR is equally as important. EOR refers to a business entity or service provider that assumes the role of the legal employer for the contract worker, typically on a temporary or contract basis. That is what SkillGigs provides as part of our services as a talent marketplace. The EOR takes on responsibilities such as payroll processing, tax withholding, ensuring compliance with labor laws and regulations, and other employment-related obligations. Organizations often opt for EOR services when they need to hire contract workers. By outsourcing tasks such as payroll management, benefits administration, and compliance with an EOR, companies can alleviate the administrative burden associated with these responsibilities. In addition to SkillGigs being an EOR for some, we have vendor partnerships with system integrators and other firms who may also provide the EOR service for the length of the contract. 

Remit rate: 

The Remit Rate is the amount that the contract worker receives as payment after the deduction of taxes, benefits contributions (if applicable), and the contracting agency’s markup from the Bill Rate. The Remit Rate represents the contract worker’s actual earnings for their services. It is essential for contract workers to be aware of the Remit Rate to have a clear understanding of their take-home pay from the contract.   

Contract Work Trends

Interim workers: 

An interim worker, also known as an interim professional or interim manager, is an individual who is hired on a temporary basis to fulfill a specific role or address a particular need within an organization. Interim workers are typically highly experienced and specialized professionals who possess the skills and expertise required to handle critical projects, manage transitions, or provide leadership during times of change. 

The primary purpose of hiring interim workers is to bridge a gap in the organization’s workforce, whether it’s due to an unexpected vacancy, a specific project that demands immediate attention, or the need for specialized knowledge that is not available internally. Interim workers are often engaged for a defined period, ranging from a few weeks to several months, depending on the nature and complexity of the assignment. Common roles for interim workers may include interim CEO, interim CFO, interim project manager, interim human resources director, or interim marketing manager, among others. 

Rise of the gig economy: 

The Gig Economy has witnessed substantial growth in recent years, driven by factors such as technological advancements, changing work preferences, and the demand for specialized skills. Many professionals are choosing contract work over traditional full-time employment to gain flexibility, autonomy, and the opportunity to work on diverse projects. 

The rise of digital staffing platforms: 

Online platforms and job marketplaces have revolutionized the way contract work is sought and offered. These digital staffing platforms connect clients with a vast pool of skilled contract workers from around the world. These platforms use algorithms and advanced matching mechanisms to ensure suitable matches between clients and contract workers, making the hiring process more efficient and accessible. 

Technology as an enabler and differentiator: 

Technology has played a pivotal role in enabling and differentiating contract work. Collaboration tools, project management software, and communication platforms have made it easier for clients and contract workers to work together remotely and deliver high-quality results. Additionally, emerging technologies like artificial intelligence and automation are transforming certain industries, creating new opportunities for contract workers with specialized skills. 

Candidate experience and employee engagement: 

With an increasing number of professionals choosing contract work, candidate experience and employee engagement have become critical factors for contracting agencies and clients. Providing a positive experience to contract workers not only attracts top talent but also fosters long-term relationships and loyalty. Effective communication, clear expectations, and support throughout the contract are essential for enhancing the overall contractor experience. 

Skill and talent gap issues: 

Rapid advancements in technology and evolving business needs have led to a growing skill and talent gap in various industries. Contract work offers a viable solution for businesses seeking specialized skills for short-term projects. By hiring contract workers with specific expertise, organizations can address skill gaps effectively, complete projects more efficiently, and stay competitive in their respective markets. 


Equipped with this newfound knowledge, contract workers can confidently navigate the dynamic landscape of independent contracting, seizing the reins of their careers with autonomy and purpose. Understanding the nuances of contract work, from the Statement of Work to the Remit Rate, empowers professionals to negotiate better terms, make informed decisions, and build long-term success in their chosen fields. Moreover, businesses that embrace the emerging trends in contract work, such as tapping into the Gig Economy and leveraging digital staffing platforms, can access a diverse pool of specialized talent to drive innovation and meet project demands with unparalleled agility.