Right to hire meaning, pros and cons

Last Updated on May 13, 2023 by Dave Farquhar

What is a right to hire? What does it mean? I have taken right to hire jobs before, and interviewed candidates for right to hire positions. But do I recommend them? Let’s take a look at the meaning of right to hire, and the pros and cons of taking a right to hire position.

Do I recommend right to hire?

Sometimes you don’t have a choice. This company doesn’t exist anymore, but there was one company in St Louis that had a reputation as being one of the better places to work but only used right to hire. They’d bring you on permanently after a period of time, but it might take a couple of years in some cases.

And at some phases in your career, right to hire positions maybe the only option open to you. I’ve been in that boat before.

Let’s talk about right to hire meaning, and why I don’t like right to hire.

The meaning of right to hire

The way right to hire works is the company uses you as a contractor for a period of time. After that period of time has expired, which is usually 6 months, they have the right to bring you on as a full-time employee. They pay a fee, and then you become a full-blown employee. They see it as a way to control risk.

Cons of right to hire positions

And I can tell you some stories about right to hire. I once had a right to hire working with me who belongs in jail. I need to wait about 10 more years before I tell that story. But I can tell you about the guy who used P2P networks to download the files he thought he needed to fix systems.

There is always some risk with bringing on a new employee, and employers see right to hire as a way to control that risk. There is a process to firing an employee, and the process for firing a contractor is much faster.

But what that does is transfer the risk to the prospective employee. And that risk is considerable. As a right to hire, your benefits package will be pretty bad. You might get holidays off. It won’t be 10. And you might or might not get paid for those holidays. You might or might not get any paid vacation time.

Your health coverage will be poor and expensive. At my last right to hire gig, I found an Obamacare silver plan was cheaper and provided better coverage than the health coverage my contractor offered. That defeats the purpose of employer provided benefits.

Perhaps most importantly, you might not get a 401k match. If you do, the match amount won’t be very good. So as far as your retirement plans go, that time as a right to hire is a lost 6 months.

And here’s the other problem. It might not be 6 months.

Even though the employer has 6 months to get their act together, every single time I’ve been a right to hire, they didn’t start the process to bring me on full-time until the 6-month mark. That meant my right to hire period dragged out to more like 9 months.

Early in my career, I couldn’t do much about it. But you do reach a point in your career when you don’t have to put up with that. If you don’t have a track record, you probably have to go through it. What I found the last time an employer put me through this was there were others who wouldn’t make me go through it. Yes, that means I once left a right to hire gig before the employer had a chance to exercise their option. I gave them plenty of time. But around the 8-month mark, my phone started ringing, with other people offering direct hire opportunities for more money. Eight months and two weeks in, someone else gave me an offer for more money. I even gave them the chance to match it. When they declined, I gave my two weeks’ notice.

It’s okay to take those calls. You’d think that 9-month gig would stand out on my resume. Surprisingly, I don’t get a lot of questions about that 9-month gig. The one or two times I did, I explained the situation, and no one ever held it against me.

To a certain extent, it’s expected. At an earlier right to hire gig, when I was about to get an offer, a manager asked me if I was talking to anyone else. I said no. He said I should have been, to protect myself.

Managing risk as an RTH

When you’re right to hire, all of the risk is on you. If the company has a bad quarter, they could cut you to save costs. Even if it’s just an accounting game. I have seen companies cut an RTH and then bring the same person back a few weeks later after the quarter was over just to make their books look better. It’s a dirtbag move and not all companies do it. But nothing stops any company from doing that.

You’re not married to them. Some companies may expect marriage-like loyalty, but that’s one-sided and it’s not wise to comply, especially as an RTH. They will not reciprocate.

The best thing you can do is keep an eye out for other opportunities. Obviously don’t advertise that you are interviewing elsewhere, but don’t stop looking. You can stop looking as hard, but keep looking and saving any job that looks interesting, even if you don’t necessarily apply for all of them. If a recruiter calls, talk to them. Keep your resume up to date, and make sure you have some options when that 6-month mark hits. You don’t want to be stuck without any options if something goes wrong at the 6-month mark. Because that happened to me once. The company had a bad quarter, so they let me go. They kept me on going week-to-week for a while because the team was shorthanded, but eventually it came to an end and I had to find other work.

Is RTH ever beneath you?

There are people who will argue that at a certain point in your career, you shouldn’t even be considering a right to hire gig. When I took my last one, a former colleague told me that was beneath me. In hindsight, he may have been right.

That said, he didn’t know my circumstance, and I don’t know yours. If you are in a bad situation, and the only way to get out of it quickly is to take a right to hire gig, it’s hard for me to tell you to wait another couple of months. In a good job market, maybe you can afford to be picky. But in a tough job market, sometimes you have to take what you can get.

In my case, I probably overestimated the right to hire gig. I was interviewing three places, and they gave me an offer letter with a very short deadline, essentially trying to bully me into taking it. Granted everything worked out for me in the end, but if I knew then what I know now, I would have negotiated the terms before taking it, and declined if they didn’t budge. Giving an offer letter with a short deadline on it is a desperation move.

If you don’t have a lot of track record, you may not have a lot of choice but to use a right to hire a gig to build your career. And if you have your heart set on a specific company and they require a right to hire period, you don’t have much choice.

But if you have a track record in your field, some accomplishments and maybe some certifications, and a good network, you will reach a point in your career where the majority of opportunities are direct hire, without any right to hire shenanigans involved.

What about RTH from the employer’s perspective?

The meaning of right to hire is the same from the employer’s perspective. They’re just on the other side of the transaction.

I will say that I can see why employers use right to hire. There’s a limit to how much you learn about a person from an hour-long job interview, even if you’re really good at conducting interviews. Not all companies have skilled interviewers. I’ve seen new right to hire coworkers come in and immediately become indispensable. And I’ve seen people come in and make me wonder how they’ve ever managed to hold down a job. I’m talking everything from complete inability to do the work to exercising very poor judgment to committing felonies while on the clock.

If a company isn’t confident in their ability to sift out those kinds of poor fits in the interviewing and screening process, RTH provides a way to manage the risk. There’s a process to firing a permanent employee. The process to firing an RTH is much faster and simpler, usually just involving a phone call.

RTH also makes sense when a company isn’t on the best financial footing. Laying off a right to hire is just as fast and simple as terminating for cause. Hopefully you extend them the courtesy of telling them in person rather than making a phone call and making the contractor do the dirty work, but aside from having a conversation, it’s still just a phone call. No severance package or anything else. Right to hire means you’ve transferred all the risk to the contracting firm and the contractor.

The downside is since the RTH is a contractor, there’s overhead involved. The contractor gets their hourly rate, and the contracting firm gets a cut above and beyond that. And if you go to exercise the RTH option, you owe the contracting firm a fee. In many ways it’s just the cost of doing business, but since you’re transferring risk, there’s a monetary cost involved in doing so.