Is contract-to-hire a 1099 arrangement?

Usually not. Contract-to-hire normally means a period as a W-2 employee of a staffing firm, with the possibility of the client hiring you directly afterwards. The name describes the intended path, not your tax status. Ask which company would sponsor during each half, and whether conversion is a promise or a possibility.

Can a staffing firm employ me on STEM OPT?

USCIS says such firms may seek to employ students under the programme, but only where they themselves provide the practical training experience and maintain a bona fide employer-employee relationship. The practical questions are who supervises and trains you, whether the firm is enrolled in E-Verify, and whether the firm owns your training plan. USCIS reviews these arrangements case by case, so take advice on your own facts.

Why do recruiters push corp-to-corp?

It moves payroll, tax and employment obligations off their books and onto yours. That can be a legitimate commercial preference. It is not a statement about whether the arrangement suits your status, and it is worth asking the question out loud.

What happens if I am on the bench without pay on H-1B?

Department of Labor rules require an H-1B employer to pay the required wage from the Labor Condition Application for nonproductive time due to a decision by the employer, such as a lack of assigned work. Fact Sheet 62I sets this out. If this is happening to you, speak to an attorney.

OfficialUSCIS, Optional Practical Training Extension for STEM Students · Last verified 5 Sept 2026

Contract, corp-to-corp and staffing are three different things

Contract describes how long a job lasts. W-2 and 1099 describe how you are paid. Corp-to-corp describes which two companies signed. Recruiters use the words interchangeably and they are not interchangeable.

Contract does not mean 1099

A contract role is one with a fixed duration or a fixed project. Most contract work in the United States is ordinary W-2 employment through a staffing firm: the firm withholds your tax, completes your Form I-9, and may offer benefits. When somebody offers you a contract role, W-2 or 1099 is a separate question and it is worth asking as one, in those words, and getting the answer in writing.

Source: USCIS, Optional Practical Training Extension for STEM Students

What a staffing arrangement actually is

Three parties, and two of them can each reasonably describe themselves as the employer. The staffing firm is your legal employer: it hires you, pays you, runs your Form I-9, and its name appears on your W-2. The client company directs your daily work and never appears on your payslip. Neither is misleading you when it calls itself the employer; they mean different things. Get both names in writing before you start, because the name your school or an adjudicator needs is the firm's.

Source: USCIS, Optional Practical Training Extension for STEM Students

What corp-to-corp is, and what it is not

In a corp-to-corp arrangement a company you own contracts with the client or with a vendor, and you are that company's employee or owner. It is not another word for 1099: in a 1099 arrangement you contract personally, while here two legal persons exist where there was one. That difference is the whole point on the commercial side and is frequently unhelpful on the immigration side, because most work-authorised statuses either name a specific employer or impose conditions a one-person company struggles to meet.

Source: USCIS, Optional Practical Training Extension for STEM Students

Where the STEM OPT extension examines the shape

USCIS addresses this directly. Staffing and temporary agencies and consulting firms may seek to employ students under the STEM OPT programme, but only if they will be the entity that provides the practical training experience and they have and maintain a bona fide employer-employee relationship with the student. Training at a site other than the employer's own premises is contemplated, provided every training obligation is still met. But the personnel who provide and supervise that training may not be employees or contractors of the employer's clients or customers, and the employer may not assign or otherwise delegate its training responsibilities to a non-employer third party. USCIS also lists multiple employer arrangements, sole proprietorships, employment through temp agencies and consulting arrangements that provide labour for hire among the relationships that may not be able to demonstrate a bona fide employer-employee relationship. It reviews this case by case.

Source: USCIS, Optional Practical Training Extension for STEM Students

Where the H-1B petition examines the shape

Placement at a third party is contemplated by the regulation itself: one of the specialty occupation criteria refers to the employer, or the third party if the beneficiary will be staffed to that third party. So it is a recognised arrangement rather than a prohibited one. Two things follow that people on a bench often do not know. Material changes to your job or your worksite can require an amended petition. And Department of Labor rules require the employer to pay the wage on the Labor Condition Application for nonproductive time caused by a decision of the employer, which is what being between projects usually is.

Source: USCIS, Optional Practical Training Extension for STEM Students

Questions to ask before you accept

Who is my legal employer, by legal entity name? Who directs my daily work, and is that a different company? Is this W-2 or 1099? Who supervises and trains me, your people or the client's? What am I paid between assignments? Are you enrolled in E-Verify? Have you sponsored before? Is there a conversion fee or a clause preventing the client from hiring me directly? What notice applies if this ends?

Source: USCIS, Optional Practical Training Extension for STEM Students

Common mistakes

Reporting the client rather than the staffing firm to your school: the firm is the employer. Assuming an arrangement that worked on post-completion OPT will survive the STEM extension, when the extension applies a materially stricter employer test. Setting up a company and then seeking approval for it, rather than the other way round. Treating a recruiter's assurance that everybody does it this way as information about your own case.

Source: USCIS, Optional Practical Training Extension for STEM Students

Official

Frequently asked questions

Is contract-to-hire a 1099 arrangement?: Usually not. Contract-to-hire normally means a period as a W-2 employee of a staffing firm, with the possibility of the client hiring you directly afterwards. The name describes the intended path, not your tax status. Ask which company would sponsor during each half, and whether conversion is a promise or a possibility.
Can a staffing firm employ me on STEM OPT?: USCIS says such firms may seek to employ students under the programme, but only where they themselves provide the practical training experience and maintain a bona fide employer-employee relationship. The practical questions are who supervises and trains you, whether the firm is enrolled in E-Verify, and whether the firm owns your training plan. USCIS reviews these arrangements case by case, so take advice on your own facts.
Why do recruiters push corp-to-corp?: It moves payroll, tax and employment obligations off their books and onto yours. That can be a legitimate commercial preference. It is not a statement about whether the arrangement suits your status, and it is worth asking the question out loud.
What happens if I am on the bench without pay on H-1B?: Department of Labor rules require an H-1B employer to pay the required wage from the Labor Condition Application for nonproductive time due to a decision by the employer, such as a lack of assigned work. Fact Sheet 62I sets this out. If this is happening to you, speak to an attorney.