Contract Employee's Newsletter
Helping Contract Professionals Manage Their Careers

November 15, 2001

Edited by James R. Ziegler

A Companion to:
The Contract Employee's Handbook
www.cehandbook.com

Sponsored by:
P.A.C.E. - Professional Association for Contract Employment
www.pacepros.com

 


About The Contract Employee's Newsletter

The Contract Employee's Newsletter is a free e-mail publication for technical and professional contractors containing news, commentary, tips, links to useful resources, nuggets of wisdom submitted by readers, and anything else that seems appropriate at the time. The CENewsletter is distributed bimonthly or whenever issues warrant and time allows. The subscriber list is confidential and will not be disclosed outside this organization.


In This Issue

Read recent issues of The Contract Employee's Newsletter.


Suggest A Topic For The Newsletter

Ideas Anyone?
Thank you for your excellent suggestions for future newsletter topics. Keep 'em coming. Chances are, if a topic interests you as a Contract Professional it will certainly interest the majority of our readers.

Guest Appearances
I would like very much to publish short guest contributions to the Contract Employee's Newsletter. Maybe a marketing tactic that works for you, or a true story of agency madness? I'll cite your name, your e-mail address, and a link to your professional website. I can't pay you, but I'll make sure that everyone who reads the Contract Employee's Newsletter knows who you are and what you do. It can't hurt, and, who knows, it might help your consulting career. Contributions should be of general interest to all Contract Professionals.

Mail your suggestions to suggestion@pacepros.com.

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Kudos and Testimonials

What People Are Saying About The Contract Employee's Project

What perfect timing! I was so happy to get this newsletter, since I am currently in the throes of contract purgatory. -- Signed K. D.

I just had to write and tell you what an extraordinary website (P.A.C.E.) you have! Very informative, and easily navigated. Unfortunately, I am Canadian and cannot live legally in the U.S. at the moment without employee sponsorship, but when I get my green card, I will be contacting you. I have already sent your URL to a few of my friends, as they might be interested in P.A.C.E. They are highly skilled project managers and program managers.

Thanks again for providing such a wonderful service. It's nice to see contractors supported in this manner. -- Signed L.C.

[Note: P.A.C.E. sponsors TN-1 visas for Canadian citizens who want to contract in the USA. TN-1 visas cost $50 at the border, and can be obtained in less than one hour. Read about TN visas at the TN Visa Page at VisaPro.com, and the TN NAFTA Home Page of the Grasmick.com Business Immigration website.]

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Marketing Tips

Qualifying Prospective Clients

In a glutted labor market you have little choice but to sell your consulting services directly to prospective clients. Why? Because when talent is abundant and jobs are scarce recruiters select only the strongest resumes for marketing to their clients. If you are not among the crème de la crème your chances of being selected for marketing are slim to none.

Posting your resume to online resume banks and spamming your resume to hundreds of companies is equally ineffective. In the absence of personal information about your character and your abilities, clients will interview only the very best from among the thousands of resumes in their candidate database.

When you are competing against hundreds and hundreds of similarly skilled Contract Professionals, asking a recruiter to place you on a contract assignment, or spamming your resume to hundreds of clients, is the very definition of "not in control."

Passive marketing techniques only work when good talent is in short supply. In a glutted labor market you must take an active approach. You must be willing to conduct your search with the same skill, persistence and creativity that you bring to your contract assignments. Your full-time job when you are between contract assignments is locating your next contract assignment. The job of finding your next contract is potentially the highest paying job you will ever have.

When you are on the job you work hard eight hours a day for your client. You should expect to work hard eight hours a day for yourself when you are between clients. You have a limited amount of time to contact prospective clients directly, and you don't want to waste it on unqualified prospects. How can you tell which prospects are worth pursuing and which ones are a waste of your time? Here are some tips for qualifying ideal prospects.

  • Former clients and their competitors
    Your best prospects are your former clients and their competitors. These are companies with direct connections to your professional network. And this is the friendliest group to market to, where trading stories and dropping names creates rapport between you and the client.

    Also, as much as companies hate to see you go to work for their competitors, they love to hire someone who has already been there. If you have already worked for the competition then you probably already understand the industry and the job to be done. Focus your greatest marketing efforts on companies that most closely relate to your skills and experience.

  • Concurrence of wants and needs
    You cannot sell to a "want" where there is no pressing need. And you cannot sell to a "need" that the client does not actually want. The client must have both a pressing need for your consulting services and also want that need addressed as soon as possible. Project managers love to talk about the items on their wish list. Don't get sucked into this trap. Shooting the bull can be a real time waster. You cannot, all by yourself, turn a want into a need. The sense of need must come from the client. Similarly, you may know that the client "needs" your skillset. But if the client does not appreciate the immediate need for your solution you will never close the sale. Market yourself most aggressively to clients that both want and need what you have to sell.

  • An approved budget
    No matter how badly a company needs you, no matter how much they want you, if the money isn't there you will never close the sale. In making your presentation to the hiring authority it is imperative that you ascertain if the project is approved and the money is available. Every company in America has pressing needs and wants right now, but few have the money in an approved budget. Always ask if the company has budget approval for the project. If the client representative cannot or will not discuss this issue with you they are blowing smoke. Pick up the phone and call the next prospect.

  • Authority to move forward immediately
    This is related to the budget issue. Find out if the client can proceed with the project immediately. If not now, then when? Chances are you cannot convince them to hire you ahead of schedule, so if the start date is 90 days in the future place the client in your tickle file and call again in 60 days.

  • Talking to the right person
    Selling to the wrong person is the biggest sin committed by rookie sales people and Contract Professionals. For every project there is only one person with the authority to say yes to your participation on the team. Identify the key person in control of the project. Regardless of who you talk with, regardless of how many people you interview with, you must sell yourself to the key decision maker if you expect to land the project. The key decision maker is NOT in HR, and she is NOT in purchasing. She is the person who owns the budget.

Your task is to sell your consulting services to the most appropriate companies that both need and want your skills, and that also have the money and the authority to proceed immediately. Every person you contact is a potential lead, but only a very few will actually be in a position to help you. The best you can do is collect the contact information from every person you talk to so you can add them to your marketing network, and then focus only on those clients that actually qualify as ideal prospects today.

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Ask Dungaree Dan

RE: H-1B Professionals - Not The Answer He Wanted To Hear!

Q: Dear Dan -- I have a suggestion. How about asking readers to write letters to their local papers (with copy to representatives) noting that, with the current employment situation, all H-1B visa engineers and scientists should be sent home ASAP. We have plenty of native unemployed technical talent to do the nation's work. -- Signed: Looking For Excuses

A: Dear Looking -- I guarantee you, this is not the answer you wanted to hear.

I don't know what your heritage is, but chances are your recent ancestors came to the United States from another country. They worked hard, contributed to this great nation's economic prosperity, built strong families, and adopted the inclusive principles that continue to make the United States the best place in the world to live and work. America owes its success to the diversity of ideas and cultures that are woven into the American fabric. You also owe your success to that same diversity, of which you are an integral member.

Maybe you live in Iowa where both the human population and the crops grow in large monocultures, but I live in California where 26% of the residents were born in another country, and where 41% of all households speak a language other than English at home. I live in the San Francisco Bay Area where one-third of the residents of the city of San Francisco are ethnic Chinese, and where over 30% of new ventures in Silicon Valley since 1980 have been founded by Indian and Chinese emigrants. Far from being sympathetic to your point of view, I wholeheartedly appreciate the ongoing benefits to all Americans of immigration and cultural diversity.

Immigration Works Both Ways
Don't think for a minute that immigration is a one-way street. There are countless thousands of American citizens working and conducting business abroad on foreign visas. When a highly trained American travels to the UK or to Australia or to the Middle East to obtain work he or she leaves behind an empty position that you can fill. Do you really want to stifle the cross fertilization of American business by giving foreign governments a reason to prevent you and other Americans from the opportunity to work and conduct business abroad?

H-1B Visa Holders Create American Jobs
I assure you, if the United States government deported all 500,000 H-1B foreign professionals the job situation would be far worse than it is today. Tens of thousands of existing projects would have to be shut down because of a lack of key talent. Hundreds of thousands of additional employees and contract personnel would be laid off. The disruption to American business would be catastrophic.

H-1B Visa Holders Spend Locally
I embrace diversity, and I embrace foreign professionals. If American companies do not employ the talents of foreign professionals locally then companies will certainly employ their talents abroad. Companies spend more money when they employ foreign talent locally than when they outsource the same project offshore. Much of the money earned by foreign professionals in the United States stays in the United States. Money spent on foreign workers employed on offshore projects is gone.

H-1B Visa Holders Increase American Wages
It is easy to disparage H-1B visa holders for being paid less than American workers. It is easy to claim that H-1B visa holders put downward pressure on American wages. I contend that foreign workers actually increase American wages by making it possible for American companies to initiate projects that they would not otherwise be able to start. New projects create demand for talented labor, and demand for talented labor creates upward pressure on wages.

H-1B Visa Holders Are Not To Blame For Their Low Wages
It is true that in many situations H-1B visa holders have been paid less than American citizens with similar skills. But the low wages are not because H-1B professionals are willing to work cheap. It is because prior to December 2000, their employers were able to use the visa process itself to hold H-1B visa holders in a state of virtual indentured servitude. Fortunately, the immigration bill signed by President Clinton in December 2000 has a portability provision that makes it possible for H-1B visa holders to change employers quickly and with relative ease. As a result, cheap companies and predatory body shops have lost their strangle hold on H-1B visa holders.

About Body Shops
A body shop is a recruiting firm that specializes in finding and placing foreign (high tech) workers on temporary assignments at U.S. companies. Body shops compete on price by billing significantly less than typical recruiting firms. Then they pay their H-1B visa holders lower wages than typical recruiting firms pay their American workers. It is predatory body shops, not their "indentured servants," that are undercutting the wages of American workers.

Body shops have a well-deserved reputation for exploiting foreign workers’ fears and ignorance in order to keep them under control. Prior to passage of the immigration bill in December 2000, obtaining a new H-1B visa could take six or seven months. A visa holder could not escape the tyranny of a cheap company or predatory body shop until a new visa sponsored by a new employer was approved. An H-1B visa holder had little choice but to accept a ludicrously low wage, or return to his or her homeland.

Here is an article that discusses a recent court case involving the common practice of body shops charging exorbitant penalties to foreign workers who try to leave the body shop.

Get Over It Already!
In order to qualify for an H-1B visa a foreign professional must have a four-year bachelors degree or higher, and demonstrated proficiency in the technical or scientific discipline for which he or she is to be employed. This screening process assures that H-1B visa holders are highly educated, highly skilled, smart, and have an excellent work ethic.

P.A.C.E. sponsors several H-1B and TN-1 visas. On average, P.A.C.E. visa holders command billing rates every bit as high as their American counterparts.

My advice to Americans who are threatened by foreign workers: Stop your complaining and step up to the plate. Companies hire skill and experience. If you don't have it, then you had better get it.

In our open, merit-based, business society you alone are responsible for what you earn, and the best way to increase what you earn is to increase what you are worth. -- Signed: Dungaree Dan

Questions for Dungaree Dan
Send your questions about contract employment to Ask Dungaree Dan. We will try to answer all of your questions, and we will publish the most interesting ones in The Contract Employee's Newsletter.

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Resources

Networking - It's A State Of Mind

I have a close friend who is an acupuncturist. Actually, she was trained as a medical doctor in China, and she is a registered nurse in the United States. But she makes her living as a board licensed acupuncturist. She charges over twice the rate charged by other practitioners in her city. Yet, she has more work than she can handle. Her patients swear by her ability to use acupuncture to ease their symptoms and cure their ailments, and word-of-mouth advertising accounts for most of her new business. But her continued success, I am certain, comes from networking.

One recent evening my friend, her husband, several other friends, and I went to a sushi bar for Japanese food and, of course, sushi. Toward the end of the meal I noticed my friend get up and approach the sushi bar where she started a conversation with the man behind the counter. They were talking about how good the sushi was, and how it was prepared. A man sitting at the sushi bar joined in the conversation, and soon my friend was talking intently to this patron as well. I was intrigued by the natural flow of the conversation. As I recall, it went a bit like this:

Compliment sushi maker on his craft => discuss finer points of sushi => patron joins into conversation => talk to patron about his work, etc. => share profession as acupuncturist => ask patron about his experience with acupuncture => set up appointment to evaluate patient and initiate acupuncture treatments."

You just never know where new business will come from. You never know where you might encounter someone who needs the "healing touch" of your consulting services.

Companies and experienced Contract Professionals report that 80% (or more!) of all positions are filled as a result of a personal relationship. For this reason it is imperative that you develop your networking skills. Clearly, the more people who personally know what you do and how well you do it, the better are your chances of being considered for a consulting position.

In my personal view, the secret to building relationships is to be obsessively and genuinely interested in everything about everyone you meet. I am not suggesting that you become a nosy busybody. I am suggesting that you genuinely care about everyone you meet.

As you will learn from these print resources, networking is a state of mind. It is something one does all the time. Networking is NOT selling. It is NOT marketing. It is NOT job hunting. Networking IS relationship building.

A Foot in the Door : Networking Your Way into the Hidden Job Market
by Katharine Hansen. Ten Speed Press. 2000.

Because over 80 percent of job openings go unadvertised, poring over the classifieds is a hopelessly ineffective way to find a new job. Career counselors hype "networking" as the most effective means of uncovering hidden career opportunities, but for job hunters who are new to an industry or the job market in general, this advice begs the question: "Where to begin?" Enter career expert and best-selling author Katharine Hansen who turns her attention to the fine art of networking in A Foot in the Door. Essential reading for the resourceful job hunter, this indispensable tool reveals the ins, outs, dos, and don'ts of getting that foot in the door and kicking it wide open!

  • Includes the most comprehensive discussion of informational interviewing available
  • Special sections on the networking needs of diverse populations (women, minorities, Generation X, and more)
  • Lists "25 Networking Tricks You Probably Didn't Know"

Information Interviewing - How To Tap Your Hidden Job Market
by Martha Stoodley. Ferguson Publishing Company. 1996

An informational interview is not an interview for a job, but rather, it is a way for you to get valuable information about industries, applications, projects, companies, and people. It is how you can meet key players without the pressure of having to sell yourself. It is the core skill you need to develop a powerful, professional network of people who know what you do and how well you do it. It is the only way to uncover the hidden job market. This book outlines techniques for information interviewing that get results! Information interviewing may be done in person, by phone or even by e-mail.

Dynamite Networking for Dynamite Jobs : 101 Interpersonal, Telephone and Electronic Techniques for Getting Job Leads, Interviews and Offers
by Ronald L. Krannich. Impact Publications. 1996.

Stop wasting time on unproductive job search activities. Put down the classifieds, quit mailing resumes and letters, and fire anyone who is charging money to find you a job. Start using communication approaches that will generate useful information, advice, and referrals that lead to job interviews and offers. In so doing, you will learn a great deal about yourself and others as well as find better quality jobs in half the time.

Power Networking: Using the Contacts You Don't Even Know You Have to Succeed in the Job You Want
by Marc Kramer. NTC Publishing Group. 1997.

The author says he wrote this book because so many people would come to him after they lost their job or joined the sales force of their company asking for contacts. They didn't realize how many contacts they actually had and weren't aware of them. They also didn't know what organizations to join and what to do at those events. This book is a quick read with lots of contact addresses and easy to follow suggestions on how to improve your network.

Don't Send a Resume: And Other Contrarian Rules to Help Land a Great Job
by Jeffrey J. Fox. Hyperion. 2001.

Dismissing the well-worn routes of sending unsolicited resumes and contacting personnel departments, Jeffrey Fox concentrates on what will turn job-seekers into super salespeople. His advice is simple, direct, and often ingenious, supported by details and made colorful by the odd illustration.

Don't stop at these books. Browse the online booksellers for additional resources related to "networking" and "information interviewing." Read, digest, reread, and practice, practice, practice. Meeting key players personally is the ONLY way that you will consistently land high-paying contract assignments.

Monster.com has 11 million resumes in its database. It receives 35,000 new resumes every day. Sending your resume to companies and resume banks in order to land a job is like buying lottery tickets in order to fund your retirement. To be successful in landing contract assignments you must actively and personally participate in the process. The resources cited above show you how.

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Contract Employee's Glossary

Terminology For Contract Professionals
More terms from Appendix B: Glossary of Terms for Contract Professionals of The Contract Employee's Handbook.

Bonus
Bonus is money or an equivalent given in addition to a worker's usual compensation. Bonuses are usually treated as ordinary income. Examples are sign-on bonus, performance bonus, and Christmas bonus.

Broadcast e-mailing
Akin to junk mail or spam, broadcast e-mailing refers to the mass e-mailing of resumes by job seekers and placement agencies. When an unauthorized placement agency broadcast e-mails your resume it can cause lawsuit-wary client companies to reject later submissions by you or an authorized agency.

Broker
A broker is an intermediary, or agent, who arranges business deals. A broker may also negotiate contracts. Examples of brokers are staffing agencies and recruiting firms, talent agents, real estate agents, insurance agents.

Bulletin Board System (BBS)
A computerized version of the familiar cork bulletin board where people can leave messages and advertise things they want to buy or sell. There are thousands of special interest bulletin boards operated by individuals from their home computers, and much larger systems run by computer companies to provide information on their products. Many BBSs have Web pages. Also called Internet forums, message boards, or discussion groups. My favorite online BBS for Contract Professionals is Janet Ruhl’s Real Rates Message Board at http://www.realrates.com. Click on “Message Board in the left margin.

Business
Any activity concerned with the supplying and distribution of products and services, and related financial transactions.

Business expenses
Businesses earn money (revenues) and they spend money (expenses). The difference is called gross profit or loss. Revenues are taxed as income unless they are offset by expenses. Independent contractors declare their business expenses on Schedule C to reduce their tax liability. Umbrella services such as the one provided by P.A.C.E. reimburse their contract employees with tax-exempt dollars for out-of-pocket business expenses. Typical staffing agencies cannot do this. The inability to write off or be reimbursed for out-of-pocket business expenses is a major disadvantage of working through traditional staffing agencies.

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P.A.C.E. News

P.A.C.E. Doesn't Feed The Sharks

Did you know that P.A.C.E. is the ONLY employer of record service that actively discourages its contract employees from working through recruiting firms? There are similar services to P.A.C.E., but they all view strategic alliance partnerships with recruiting firms as essential to their continued growth and financial success.

Why would an employer of record that purports to work for Contract Professionals choose to partner with predatory recruiting firms that work against Contract Professionals? One almost wonders if they might be accepting referral fees (kickbacks?) from the recruiting firms with which they have partnered.

P.A.C.E. is not in the business of feeding Contract Professionals to the sharks. And we don't make side deals with recruiting firms. On the contrary, P.A.C.E. is in the business of showing Contract Professionals how to stay clear of recruiting firms that take such a big a bite out of the billing rate. We subcontract through recruiting firms when we have to, but we don't like it, and we will never profit from that type of relationship.

At P.A.C.E. the focus is on you, the contract professional. Our goals are aligned with the success of our Division Managers, knowing that our own success will flow naturally from long-term relationships based on honesty, integrity, sincerity and trust.

Recruiting firms and temp agencies tend to view contractors as a commodity to be sold and traded on the open market. They use contract employees to make money. This focus on the contract employee as commodity creates a powerful incentive for recruiting firms to abuse their trusted position as intermediary between client and contractor.

Recruiting Firms and Temp Agencies get in the way
In the traditional temp agency model the relationship looks like this:

Contract Professional >>> Temp Agency >>> Client Company

As you can see, the temp agency acts as a gatekeeper, restricting free access to the client company by the contract professional.

P.A.C.E. gets out of the way
We at P.A.C.E. have a different point of view. P.A.C.E. operates in the background, giving our Division Managers direct access to the client.

In the P.A.C.E. model the relationship looks like this:

P.A.C.E. >>> Division Manager >>> Client Company

P.A.C.E.'s customer is the Division Manager. The Division Manager's customer is the client. P.A.C.E. Division Managers have full, unimpeded access to the client for whom they are providing direct consulting services.

It is this focus on the contractor as customer that sets P.A.C.E. apart from recruiting firms and temp agencies.

P.A.C.E. insists on full disclosure
Another way that P.A.C.E. distinguishes itself from recruiters and temp agencies is its insistence on full disclosure. P.A.C.E. provides its employees with a full accounting of all revenues, fees and expenses. P.A.C.E. employees have the information they need to make informed decisions about their careers and their livelihoods. There are no secrets.

P.A.C.E. is a Win - Win - Win - Win Solution for Downsized Employees, Contract Employees, Independent Contractors, and Client Companies. Check out P.A.C.E. for the best benefits package available to ANY employee in ANY company in the USA.

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Contract Employee's Handbook

Leveling The Playing Field

Five years ago, before I began working on the Contract Employee's Project, which now incorporates The Contract Employee's Handbook, The Contract Employee's Workshop, The Contract Employee's Newsletter, and P.A.C.E., there was no single source of information that showed W-2 contract employees how to negotiate the agency minefields -- not on the Internet, not in the book stores. For sure, there are excellent resources published for self-employed independent contractors, but there was nothing that specifically addressed the unique issues affecting W-2 contract employees in the United States.

The lack of information existed, I believe, because the knowledge base was closely held by the agencies themselves. You see, traditional agencies using commissioned recruiters have a vested interest in withholding key knowledge from both the client company and the contract employee. That is how they can continue to bill high and pay low. What is incredible is that contract employment is one of the fastest growing segments of the American economy, resulting in and from a virtual complete overhaul of the "New Workforce in America". Yet, the contract employment industry operates almost entirely as a sub-rosa business profiting enormously from an industry-wide "code of silence."

I have worked as a permanent placement headhunter, and I appreciate the hard work, enormous risks, and high overhead involved in servicing a client's staffing needs. But, I also appreciate the incredible opportunity for abuse that happens when information is suppressed. The Contract Employee's Handbook is my attempt to describe as concisely as possible how the contract employment industry works, and how this industry can work to the advantage of Contract Professionals who know the score.

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Contract Employee's Workshop

San Francisco Bay Area: January 12, 2002

We are counting down to the launch of the first all-day Saturday Workshop for technical and professional contractors. The first CEWorkshop will take place somewhere in the San Francisco Bay Area. Cost of admission will be in the neighborhood of $50, provided I can locate an inexpensive yet comfortable venue large enough to hold at least 50 people. It would be nice to have a corporate sponsor for the workshop, especially if I don't have to sell my soul (and halo) to qualify for their support. Ideas anyone?

Participants will leave the workshop with a solid understanding of how the technical and professional contracting industry works. Agency contractors will learn how to increase their earnings by 30% to 50% on their very next contract assignment. The workshop will cover how to set your billing rate for maximum earnings, and how to market your consulting services directly to client companies. The handouts alone are worth the cost of admission.

After the initial shakedown I'll take the workshop on the road to those cities across the US that express the greatest interest in The Contract Employee's Workshop.

I'm open to suggestions. E-mail your ideas and suggestions to Workshop@pacepros.com

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The Contract Employee's Project

The Contract Employee's Project is the larger context under which the following interrelated vehicles operate to promote and defend the interests of Contract Professionals:

  • The Contract Employee's Handbook
  • The Contract Employee's Newsletter
  • The Contract Employee's Workshop
  • Professional Association for Contract Employment (P.A.C.E.)

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Copyright and Publication Info

Copyright (c) 2001, James R. Ziegler. All rights reserved.

You may copy or forward this free publication provided it is left intact with all links and this notice unchanged. Any unauthorized duplication, including republication in part or in full for commercial use, is an infringement of copyright.

Published by:
P.A.C.E. - Professional Association for Contract Employment
1355 Willow Way, Suite 244
Concord, CA 94520
USA
http://www.pacepros.com/

Editor:
James R. Ziegler, Ph.D.
Executive Director
P.A.C.E. -- Professional Association for Contract Employment
(925) 680-0200
ziegler@pacepros.com

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Disclaimer

The Contract Employee's Newsletter is designed to provide information in regard to the subject matter covered. Use is granted with the understanding that the publisher and authors are not engaged in rendering legal or financial advice. If expert assistance is required you should seek the services of a competent professional.

The purpose of this information is to educate and entertain. The publisher and contributors shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused, or alleged to be caused, directly or indirectly, by the information contained in this Newsletter or by information contained in any web site or resource referenced by citation or hypertext link within the pages of this Newsletter.

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Sign-off

I hope you have found the information in this newsletter to be interesting, informative, and provocative. I encourage you to share the CENewsletter with your friends, colleagues, coworkers, clients, and agency recruiters.

Why clients? Because you need every ally you can get. Why agency recruiters? Because they need to know the jig is up.

Wishing you success in your contracting career,

James R. Ziegler, Ph.D.
Executive Director
P.A.C.E. -- Professional Association for Contract Employment

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