Sarah has been working for the same company, on and off, for three years. Her latest contract runs for a few more months. She's desperate to be offered a full-time position, but she knows this isn't likely. She's been disappointed too many times before. She reckons she’ll wind up looking for another gig elsewhere. If nothing shows up, she'll be back here again, on yet another contract.

In the meantime, Sarah receives few of the benefits enjoyed by the people she works with, people who she considers to be her friends and equals. She can't take paid vacations or sick days. Her medical coverage comes from her husband's employer. She can be dropped at any time, with no compensation. Even though she's a creative, she has no career progression path.

Sarah is one of thousands of game industry creatives who are finding it difficult to escape contract work. They do much the same jobs as their full-time colleagues, but they are treated very differently.

Many of the games that you play are created by big name development teams that have spent years nurturing a reputation for excellence. In interviews and at game show presentations, studio bosses are always keen to talk about the value of their teams, their talent and their creative culture.

Fear and anonymity The contractors we spoke to for this story say they are fearful about being identified as trouble-makers, and are reluctant to talk to the press. Every person we interviewed spoke only on the condition that we do not reveal their identities. We have respected this by refraining from using their real names, while at the same time validating their claims in various ways. Worried that they might be identified by their stories, many interviewees also asked that we not identify particular employers. We have therefore named companies that were identified to us, but decoupled them from the individual stories.

But most companies in the game industry are less willing to talk about the many contractors they use to help get their games out the door. According to employment agency TargetCW, an estimated 10 to 15 percent of people working in the creative departments of medium and large game developers are not actual employees. They are contractors, hired for short periods of time and then let go.

Some contractors choose to live this way, and they enjoy the freedom and variety it offers. High-end contractors can earn more than $100 an hour, working from home. But most contractors work on-site for an hourly rate that starts at $15. They are often treated like employees, but without the benefits and protections, according to interviewees.

Many contractors are frustrated that they can't land a full-time position. Some of the contractors Polygon spoke to say they feel mistreated and even mislead by managers who dangle the possibility of full employment, but rarely follow through. In employment law circles, this is known as "employment misclassification."

"I had no benefits, no insurance, and no vacation time."

"Most contractors are paid on a day or hourly rate," says Nate Gibson, an independent contractor compliance specialist and expert on employment misclassification. "They get no unemployment insurance, no workers’ comp. They're basically told what to do and where to do it. They're really treated like employees but are classified as independent contractors as a way for employers to save money."

Gibson estimates that employers save about 30 percent in costs each time they classify an employee as a contractor. "That's a significant amount of money for companies in a competitive business situation. It's a big chunk of saving."

Intense use of contractors and avoidance of taking on full-time employees is something the Internal Revenue Service, legal firms and advocate groups are keen to diminish.

"This is an issue in the game industry," says Kate Edwards, head of the International Game Developers Association. "It's not viable. It's something that's going to be scrutinized and eventually action is going can be taken."

Dangling the carrot

Sarah's specialty is creating cinematic cut-scenes, especially those involving characters. This is the sort of work that mainly gets done at the end of a project. She's in her late-20s, and has spent much of her career as a contractor.

The company she's contracting for right now is one of the biggest names in game development, with multiple studios around the world. She's hoping to land a full-time gig so she can grow her career and take advantage of employment benefits.

"Games companies are notorious for dangling the carrot," she says. "They put you on a year's contract and they say that it might end with a full-time position. You're in suspense until two weeks before your contract is up and then say 'oh we can't convert you.'"

Workers affected by a shift towards contractors say they live with a sense of uncertainty, and of exclusion.

Due to tax and employment laws, companies can only employ contractors for a limited time. There are also restrictions on contractors' activities, such as attending company meetings. According to contractors Polygon spoke to, these regulations are widely flouted, with part-timers treated much the same as employees, right up until their contracts are terminated.

"If there's somebody in the office who’s working right next to other people 40 hours a week and most of the year, and they don't have other clients and they don't have any indicators that they have their own business it becomes harder to class them as an independent contractor under the current laws," says Gibson.

Game companies have learned that the boom and bust strategies of hiring when times are good, and then laying off large numbers of staff when the economy tightens, or when game sales dip, is bad publicity and damaging to internal morale. Some states also levy taxes against companies that lay off large numbers of employees.

Employers have also learned that moving staff between internal projects is extremely difficult to coordinate. Games slip their deadlines, and so staff who were due to move onto a new game may no longer be available. Contractors who can be dropped without consequences help to alleviate this problem.

Then there's that 30 percent cost saving. Many contractors work for external agencies. The game companies don't have to worry about individual payroll. A lot of backroom costs, as well as healthcare and retirement help, simply vanish.

Employers save about 30 percent in costs each time they classify a contractor as an employee.

The result of all this is that most companies centrally dictate a maximum headcount, with extra labor brought in to fill the gaps. Sarah says she's worked at studios where up to 50 percent of workers are under short-term contracts.

Workers affected by a shift towards contractors say they live with a sense of uncertainty, and of exclusion.

Most of the dozen contractors we spoke to said that they started taking contract work as a way to get into the game industry, seeing it as a foot in the door. However, as employers extend their use of contractors, it becomes more and more difficult to escape to a full-time position. As workers find partners and settle down, their ability to move to new contracts diminishes, but their accrued experience and expertise is still insufficient to break through strictly controlled head counts.

"My immediate boss says she would love to hire me full time," says Sarah. "But she's got bosses and they've got bosses, and they're just saying 'no way' to new full-time hires, especially in my area.

"It makes me feel like the hired help but at the same time, they want me to make an commitment to the project as if I work full time. So I make suggestions about what we might do to make things better, and then they remember that I'm a contractor so they ignore me."

More contractors, fewer employees

Big companies are increasingly aware of the potential legal problems of hiring contractors, who are then treated more like full time employees. They bring in specialists and human resource managers to ensure that lines aren't crossed. Some firms have differently colored identity badges for employees and for on-site contractors.

They outsource the handling of contractors to employment agencies that specialize in "contingent workforce management." San Diego-based TargetCW is one of the leading such agencies. Its clients include many of the biggest game companies. TargetCW says it currently handles 15,000 workers in the game industry. For context, this is about twice as many people as EA employs.

TargetCW attracts would-be employees looking for work, while also trawling places like LinkedIn seeking people with the right skills for clients. According to CEO Samer Khouli, the number of contractors going to game companies is increasing by 30 percent every year.

"They remember that I'm a contractor so they ignore me."

Another problem faced by contractors is cultural. In creative industries like the movie business, short-term contracts are the norm. People come together to work on a contract, then they disperse onto their next projects. Their rights are are fiercely protected by longstanding union rules, things that do not exist in gaming.

Video game productions are different. They tend to be created by teams that stick together, and have a high social cohesion and a rah-rah mentality. This can be daunting for outsiders. It's also a challenge for employers to get contractors on board with the team ethos.

"We place a lot of emphasis on cultural awareness," says Khouli, whose services include payroll, human resource management and client advice. "Gaming studios tend to be cult-like. They have a very strong culture. We know that contractors and freelancers need to adapt and be included in that culture so they are very effective, but there's also legal compliance in that culture as well."

If a company is audited or there's a misclassification lawsuit, one of the first questions is going to be whether the contractor was invited to company meetings, company excursions and official social events. To keep inside these red lines, savvy employers exclude contractors from community events. But most of the contractors Polygon spoke to said they were regularly expected to attend such events.

Lax employment laws

Smaller companies often operate in a more haphazard fashion. Rachel is a writer who was hired to help on the script for a game at a company employing only about a dozen people. Within weeks, she was also working on other aspects of the game, being taught to handle functions she'd never faced before. She didn't mind. It made her feel she might be taken on full-time.

"I did everything under the sun including work in Unreal, sound design, systems design, combat design, writing, playtesting, QA, you name it," she says. "But I had no benefits, no insurance, and no vacation time."

The IRS takes a keen interest in companies that make use of contractors, when many feel they should be employees. Their guidelines on training are clear. "More detailed instructions indicate that the worker is an employee. Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor."

When the game shipped, Rachel was moved onto low-level administrative duties. She quit. Contract regulations state that workers should be paid only to perform the duties for which they are hired. But that was just the start of her troubles.

What can you do? Kate Edwards at the IGDA says anyone who is entering the game industry can contact the organization for help and advice. "Education is really important,” she says. “We've got a lot of experience with employment issues in this industry at all kinds of levels. People who are entering into the industry need to ask questions. “It's one of the reasons we’re doing a mentor program at certain events. We have people come in and ask people questions from experienced developers. You have fantastic passion you want to channel into your job but at the same time you need to be aware of what you're getting into and you need to step back from that excitement and put on your rational thinking hat about the conditions under which you're going to be working."

"When tax time came around, I got clobbered by the IRS because I'd been a contractor that entire time and the tax rates for independent contractors are higher on the first $113k. I consulted a tax attorney, and the conclusion was that yes, I should have been an employee the whole time, but that I'd spend more money fighting the situation than I would get out of it, not to mention the risk of being blackballed. So I dropped it, scrambled the money together to pay the IRS, and promised myself not to make that mistake again."

Michael is an artist who went to work for a small developer creating an esports title on the recommendation of a friend. Initially, he was happy enough with a verbal contract which, he was told, would lead to full-time employment. He worked long hours to try to impress, but the offer never materialized. He walked away.

"My advice, especially for people just looking to get a foothold into the industry is be careful. Get written contracts or get hired in. Don't do anything on a verbal agreement. The temptation to get started into is so alluring that it can be easy to forget that you need to make sure you are secure as an employee or contractor. These practices run rampant in gaming and esports."

"We're talking about people's lives here," says the IGDA’s Edwards. "Somebody is in the midst of a project and they're told to just not show up the next week? I know from my own experience and talking to people who've been through this that it leaves a lot of bitterness."

"The guy that fired me had something against me personally."

Robert was taken on for an hourly rate at a four-person studio, while he was finishing college. "There was always a promise that 'once you graduate, you'll be hired as an employee,'" he recalls. "After I graduated, the promise became 'once we finish the game and money starts coming in, you'll be hired.' It took me a while to realize this wasn't a good deal for me, it was a way for my boss to pay us the minimum acceptable and avoid a bunch of taxes and employee benefits."

He says he spent too long waiting for something to happen, and although he knows some people who enjoy being a contractor, he worries that they are missing out on career growth. He spent five years as a contractor, and now has a full-time job.

According to Gibson, taking contractors on as a trial run -- to see if they might cut it as an employee -- is against regulations. "Putting someone on a contract just because an employer wants to get to know them better is not a good reason for classifying them as an independent contractor. If the employer is subject to an audit, the auditor will typically say they should have been an employee all along and there'll be fines and penalties."

Employment law firm Littler Mendelson estimates that fines can come in as high as 70 cents for every dollar paid to the contractor. Back in 2000, Microsoft and Time Warner both paid millions in fines and reparations to thousands of workers who were misclassified as contractors. But such cases rarely go to court. Few contractors have enough money to afford legal fees, and many are afraid of being blackballed.

Game companies have been fined for other forms of misclassification. In 2006, Electronic Arts paid out $600 million in overtime to employers who were asked to work for no pay after hours, but who should have been paid. Earlier this year, Valve was hit by a lawsuit for wrongful dismissal and for misclassification of a contract employee.

Gibson said the problem is likely widespread with smaller companies, which are rarely audited by the government. "The bigger the company, the more conscious they are of risk," he says. "A publicly traded company has deep pockets so that if there's a claim there's a real risk there that there will be a significant loss. Small companies don't have as much invested and so they are willing to take risks."

Zero security

Tyler, a video editor, was delighted when he was hired by a large publisher. But when he started work, he was told that he was actually working for a contract agency, and not for the company itself. He said this was not made clear to him at his job interview.

In his first few weeks, he admits to being "a little green and not good at taking feedback." But after a conversation with his boss, he worked on this and the issue never came up again.

During his tenure, his hours were increased, but his wages were not. "We never signed anything agreeing to this change, nor were we told it was happening." he says. "When one of my [contract] coworkers asked if it was negotiable, he was told no and that he could always look for another placement if he wasn't happy."

Tyler decided to not make a fuss and to get on with the job. He considered himself fortunate to be working in the video game business. But after 18 months at the company, he was suddenly fired for "having a bad attitude."

"I have no idea why they didn't just say that the contract was over. I think the guy that fired me had something against me personally. I wasn't the only one. It was almost like they singled out specific people and if they don't like you, you're gone."

He said that about half the people in his department were contractors, but that very few were taken on full-time, even though most of them wanted to stay and said so to their bosses.

"They definitely go after people who really like games. For most of us, this was our first or second job, right out of college. Employers bank on the fact that everyone wants to work at a games company."

"People really want to work in the game industry. Companies often try to take advantage of that passion."

"At one point, a few months into my contract, one of my managers actually referred to it as 'the carrot we dangle in front of you,' like we were all donkeys."

Without a severance package, Tyler struggled for a few months. Eventually, he moved to a cheaper city, and is now employed as a video editor, but outside the game industry. He said he'll never take another contract, even if it means he can no longer work in gaming.

"People really want to work in the game industry," says Edwards. "Companies often try to take advantage of that passion. We would like companies to be very up front and explicit about the kind of jobs that someone is hired into especially for people who are new into the industry who may not have all of that knowledge and education and experience to know better."

But game companies are reluctant to talk about their hiring practices. Polygon contacted a number of companies mentioned by the contractors we interviewed. We asked them how many contractors they use, and what practices they have in place for contract workers. Riot Games and Microsoft declined to comment. Activision and Ubisoft did not reply.

An EA spokesperson declined to address specific questions, but sent us a written statement. "EA employs a wide spectrum of non-employees to provide services spanning from administrative and professional services, to creative and development services. In engaging both our employee and non-employee workforce, we work very hard to ensure everyone is treated with respect and fairness."

It should be noted that the use of contractors is common across the industry, and not just among these companies mentioned.

Financial peril

The IRS considers any on-site worker to be a full-time employee, if that worker spends a significant proportion of their working life in the office and has no other clients. Employers in the game industry often seek to avoid scrutiny by restricting contractors to a nine-month maximum stint. But after their contractors have taken three months off, they are then rehired for another nine months. But this ideal is often flouted, with contractors staying for a year or more at a time.

Some contractors Polygon spoke to said they enjoyed taking a few months off every year, but most felt the break was financially onerous.

Luke, a QA tester, worked for a large game publisher on a nine month contract. When the game was delayed, he was offered a three-month extension and then a further extension. Eventually, he clocked up a consecutive one year and eight months.

During that time, he was given development duties beyond the scope of his contract. He also managed to negotiate an hourly raise from $15 to $18. But despite glowing praise from bosses, and numerous conversations about a full-time position, he remained disappointed.

"I was raised with the idea of hard work eventually being rewarded. I was extremely disappointed to learn that isn’t always the case."

"My manager said that all QA full-time positions were filled at the moment with no openings, and the only way an opening would occur would be 'if any of those guys quits or dies any time soon.’ He then followed with a basic outline of a possible scenario: finish out my current contract, wait the three months, come back and continue to work again while the QA headcount and budget is re-evaluated, and then maybe a position will open up."

Over his long contract, Luke was unable to take a vacation, and sick days were a problem. "If I was feeling a little sick I just had to stock up on the cold medicine and bring some throat lozenges to work. If it was really bad I forced myself to stay home and deal with the loss in hours."

Luke was working alongside people who did get sick days, vacation time, medical insurance and 401K benefits. He was doing the same job, but received none of these benefits from the company. "I was raised with the idea of hard work eventually being rewarded. I was extremely disappointed to learn that isn’t always the case," he says.

Alone in the office

David is a 3D artist who spent a long time at a large publishing house. "I was always told I wasn't supposed to be at company meetings, but they invited me along all the same," he says. "I would dread the holidays. It was lost pay for me and I knew I would have a harder time paying my bills. I got permission to go in for the two weeks between Christmas and New Year because I could not afford to miss that much pay. I went in, and was the only one in the studio working."

According to Khouli, the game industry model of long development cycles, ending in crunch, along with a large and keen pool of workers, probably means that contracting is here to say.

"Hey, your contract is up, and that's the end of it."

"If a company is making a game and the talent that they need isn't necessarily high level talent, when they're done with that game what are they going to do with them? What are they going to do with those 50 QA people? If they don't have another game, they've got to go down to their skeleton crew."

"This touches upon a larger topic about how the game industry treats its talent," says Edwards. "Sure, there are certain jobs that are going to be outsourced to contractors. But those people are still valuable. Companies should realize that you need to treat your people as the valuable assets and not as just disposable cogs you can just replace."

But for those who feel like they are stuck in a rut of one contract after another, the system look less practical. Sarah says that after a short spell in full-time employment, she had to move for family reasons. Now she's back as a contractor. "Coming back into that experience feels like a kick in the face," she says.

"I just want there to be clearer definitions. I feel like they are very wishy-washy in terms of a difference between contractors and employees. They're trying to make us think that we're a part of this big thing, and we're all working together towards a goal. They want me to make an investment in what they are doing but then my contract is up, and they're suddenly very blunt about it. 'Hey, your contract is up,' and that's the end of it."