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Contract Employee's Newsletter
Helping Contract Professionals
Manage Their Careers
Vol. 3, No. 1
January 03, 2003
Editor: James R. Ziegler, Ph.D.
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 online 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 published bi-weekly 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.
Featured Topic
The
P.A.C.E. ProTrac Agency Conversion Calculator
Are you currently employed by an agency, but getting little or
no benefits? Give yourself a raise and great
benefits!
Here's how it works. You convert to an employee of P.A.C.E., and
P.A.C.E. then subcontracts through your original agency. P.A.C.E.
invoices your current agency 15% above the quoted W-2 pay rate.
The 15% covers payroll taxes and administrative overhead that the
agency passes to P.A.C.E.
The client still contracts directly with the agency. The agency
breaks even in the deal, and you receive higher total compensation
and far better benefits than if you stayed with your original agency.
And you don't have to wait until your next gig to convert. You
can convert immediately!
As far as the client is concerned nothing has changed. But you
come out ahead, the more so the more you take advantage of P.A.C.E.'s
great benefits.
Hard to believe? The P.A.C.E.
ProTrac Agency Conversion Calculator proves it.
Return to Table of Contents.
News and Views
Inevitable Disclosure Doctrine (IDD) Struck Down
In California
Over a year ago, in the October
01, 2001 issue of The CENewsletter, I wrote about a particularly
insidious development, in which the US Court of Appeals, 7th Circuit,
(1995, PepsiCo Inc. v. Redmond) validated something called the Inevitable
Disclosure Doctrine (IDD). The IDD gives an employer the right to
prevent a former employee from working for a competitor if the employee
had access to the company's trade secrets and if their misappropriation
and disclosure to the competition is deemed to be inevitable. Under
the IDD a trade secret owner (e.g., your agency) could prevent a
former employee from working through a competing agency even when
the owner is unable to prove that the employee has taken or threatens
to use trade secrets.
I pointed out that agency contracts often contain language that
attempts to define as trade secrets the names of your client contacts,
and I suggested that agencies may try to use the IDD to keep you
from working for a competing agency on the basis that you have learned
agency trade secrets that could help your new agency compete against
your former agency. I noted that the IDD had been upheld by courts
in California despite the fact that Section 16600 of the California
Business and Professions Code states that "every contract by
which anyone is restrained from engaging in a lawful profession,
trade, or business of any kind is to that extent void."
Now there is good news for California employees. The Court of Appeal
in September 2002 issued a decision that clearly rejects the Inevitable
Disclosure Doctrine as "contrary to California law and public
policy." In Schlage Lock Company v. Whyte, the Court of Appeal
held unambiguously, "we reject the inevitable disclosure doctrine.
We hold this doctrine is contrary to California law and public policy
because it creates an after-the-fact covenant not to compete restricting
employee mobility."
Barring a successful appeal the IDD appears to be dead in California,
However, the IDD has also been adopted in other states, so be vigilant
against desperate agencies trying to threaten you with it to keep
you from switching agencies while at the same client.
Return to Table of Contents.
Kudos and Testimonials
What People Are Saying About The Contract Employee's
Project
San Francisco Business Times names P.AC.E. to list of top ten
fastest growing private companies in the San Francisco Bay Area.
P.A.C.E.'s selection in the number four spot was formally announced
September 26th 2002 at an exclusive awards ceremony in the Grand
Ballroom of the Fairmont Hotel, high atop San Francisco's famous
Nob Hill.
See the Press Release below for more of
the subject.
=====
P.A.C.E. Division Manager, Mary-Jane Buschlen, sent the following
message to everyone on her contacts list to tell them about P.A.C.E.
And the Contract Employee's Newsletter.
Hello friends,
I now work for P.A.C.E. who puts out this newsletter for existing
or would-be contract employees. I'm doing it... I love it and
I want to share their take-control-of-your-career concepts with
you.
Thank you so much Mary-Jane. Don't forget that you qualify for
a 1%
referral rebate for each friend or colleague that joins P.A.C.E.
as a result of your recommendation.
=====
Randie G. sent in these kind words:
I am slowly reading through your handbook, am learning a lot,
and enjoying the writing style. Thanks for such an excellent,
useful and readable guide.
=====
We like pats on the back. Now, if you'd just rub a little to
the left. Now, a little bit lower. There! Ahhhhhh. . .
Return to Table of Contents.
Ask Dungaree Dan
How Do I Market My Killer App?
Q: Dear Dan -- If a developer develops a package for small-medium
size businesses that is upgradeable to larger applications (i.e.
Oracle, PeopleSoft, SAP or SAS), how does that developer market
his/her application to the masses? There are no standard guidelines
for entering a particular field, so how does one go about being
a data mart developer, coming from application support or ANY other
field? How does one publish his/her SUCCESSFUL experiments in IS/IT?
-- Signed: Budding Entrepreneur
A: Dear Budding -- Marketing a product is not unlike marketing
your own consulting services directly to client companies. In fact,
the two processes complement one another and may even contribute
to increased sales in both areas.
As with marketing your own consulting services, there is no magic
bullet to target the best approach to marketing your product. One
thing is certain, however, you must develop a successful track record
with your product, and you must create a critical mass of industry
buzz so that potential clients have already heard about your product
before they get a pitch to buy it. In software sales, as with consulting,
reputation is everything.
There are many small things that you can do to create and build
your reputation. Here are a few.
- Create a professional website that features your product
and your consulting services. Survey the major players and model
your site design so that it has the look and feel of a successful,
mature business.
- Search the web for information on search engine optimization
so that your website will appear in the first 50 or so listings
in the search results. This is not a trivial process, but
with a little research and reading some e-books that you can download
(for a price) from the web you can get the basics down and achieve
pretty good results.
Incidentally, savvy consultants earn big bucks optimizing web
pages so that they are indexed by the major search engines, and
so can you if you take the time to learn the tricks. But even
if your web site does not rank high in the search engines, a professional
appearance will go far toward building and supporting your credibility.
- Use your web site like a professional portfolio to showcase
your own consulting services and your product's features and benefits.
Include testimonials and letters of appreciation from past users
and clients. (But please, out of courtesy, don't include their
direct contact information.) Post articles and essays that you
have written and samples of your work.
- Post your skills profile (Note: Vendors use skills
profiles that emphasize what they do and how well they do
it. Out-of-work employees use resumes that list dates of
employment and former employers.) Post an online version of
your skills profile in HTML format and provide links to downloadable
plain text and formatted versions.
If you have more than one specialty create a separate skills profile
for each specialty. Chapter
5 of the Contract
Employee's Handbook has some good advice about how to build
a skills profile.
- Join one or more very active software developers associations.
Aggressively participate and get to know all the key players in
each association. Offer to speak about specific topics that you
are adept in. Help others generously. What goes around comes around.
Spread genuine good will.
- Join several online discussion groups and forums for software
developers. Search Yahoo
Groups, Topica,
and Google Groups. The Google.com
home page has a Groups tab for this purpose. Participate like
a demon. Help others. Ask questions. Contribute generously. Don't
sell. Just help. Selling on these groups is very bad form. You
want to become known as a reliable and knowledgeable resource,
not an obnoxious sales hack.
- Post your product on c/net's Upload.com.
They have several areas where you can register your product for
review and download by others at c/net's Download.com.
- Consider freeware or shareware. Build in nags and disablers
into your software product so that after a set period of time,
say 60 days, people will have to buy your product or stop using
it.
- Consider using your product as an enticement to attract consulting
and development business. Market your specialized consulting services
to build customized versions of your product, and to maintain
your software products once customers have downloaded them. In
this way your product will complement your consulting business,
and visa versa.
- Buy a book on business plans and create a comprehensive business
plan for both your consulting business and for your software sales
business. Take a course in business plan development from a local
college or business school. A business plan forces you to consider
everything that will affect the success of your venture.
There are several how-to books available on building business
plans.
- Create professional data sheets that explain how your product
works. Post them as downloadable files on your website, and send
them to interested parties along with your skills profile.
- Have a professional graphic artist create a logo and a unique
look and feel for your marketing materials and website.
These ideas only scratch the surface, but each one of them is a
vital component of a comprehensive marketing plan. One could go
on forever, but I suspect that by now you are beginning to get my
drift.
It mostly boils down to this: Study what the big guys do and emulate
them. But do it for pennies, and do as much of it as possible by
yourself. It's not about how much money you spend. The recent dot
bomb fiasco has (hopefully) taught us that much. It's about having
a viable business model and personally generating enough buzz to
create interest and credibility.
Even though you may think that you have developed the ultimate
"killer app" you must cover all the bases with a lot of
hard work and time spent developing buzz. Even the ultimate killer
app will fail if it does not have exposure, and without money the
best you can do is leverage the Internet through ingenious guerilla
marketing.
The guerilla marketing program you develop to market your product
should be identical to the guerilla marketing program you develop
to market your consulting services. They will complement each other,
and the synergy will help you sell more of both.
I hope you appreciate that developing a killer product or service
is only the first, and possibly the easiest, part of building a
successful software consulting and development business -- or any
other business, for that matter. -- 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.
Return to Table of Contents.
Resources
Rip-off Report
Fun site for bottom feeding Web surfers. The Rip-off
Report is the nationwide consumer reporting web site where consumers
can enter complaints about companies and individuals that are ripping
people off. They have a large collection of Bernard
Haldane rip-offs and complaints about the Better
Business Bureau, plus lots of other good reading.
Been scammed by an agency recently? Post your complaint to the
Rip-off Report.
Return to Table of Contents.
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.
Invoice
An itemized statement, in greater or lesser detail, submitted to
the client by a Contract Professional or other vendor, specifying
the work done, the prices for the work, and the terms of payment.
A bill.
IRS Form 1099-MISC.
Companies use this form to report to the IRS payments over $600
paid to unincorporated independent contractors. Companies do not
have to prepare Form 1099-MISC. for corporations. Many companies
make it a practice to prepare Form 1099-MISC. For all their vendors,
even when it is not required.
IRS Form 1099-MISC. states the client’s (payer) name, address
and tax identification number. It also states the independent contractor’s
(recipient) name, address and tax identification number.
IRS Form 1099-MISC. reports total non-employee compensation in
Box 7. Backup withholding is reported in Box 4 only if the client
withheld a 31% income tax assessment because the independent contractor
failed to supply a Social Security number or valid tax identification
number.
IRS Form SS-4
Use Form SS-4 to apply for a federal employer identification number
(FEIN, or simply EIN).
IRS Form SS-8
This form is titled “Determination of Worker Status for Purposes
of Federal Employment Taxes and Income Tax Withholding”. You
can ask the IRS to make a determination as to whether an employer-employee
relationship exists by filing Form SS-8. If the IRS finds that an
employer has incorrectly treated you as an independent contractor
the employer may be liable for the social security and Medicare
tax withholding that the employer failed to withhold and pay.
IRS Form W-2
Employers must deduct applicable local, state and federal income
taxes as well as payroll taxes from their employee’s pay. Total
wages and withheld taxes are reported on IRS Form W-2, Wage and
Tax Statement, and given to the employee at the end of the year.
Employees file a copy of IRS Form W-2 with their local, state and
federal income tax returns. Companies give a Form W-2 to their employees.
They do not give a Form W-2 to independent contractors.
IRS Form W-4
Employees use IRS Form W-4 to indicate how much federal income tax
they want their employer to withhold from their pay. Employees may
specify a fixed dollar amount and/or a number of allowances.
IRS Form W-9
This form is titled “Request for Taxpayer Identification Number
and Certification“. Independent contractors are required to
give their clients a valid tax identification number (TIN) at the
beginning of the client-vendor relationship. IRS Form W-9 is used
for this purpose.Sole proprietors may submit their Social Security
number or a Federal Employer Identification Number (FEIN) if they
have one.
All other independent contractors must submit a valid FEIN. If
an independent contractor fails to provide a valid TIN, the client
is required to withhold 31% of what they owe the contractor as an
assessment for income taxes. This assessment is called backup withholding.
In practice a client company should never engage the services of
an independent contractor, or any other vendor for that matter,
without first obtaining the vendor’s TIN.
Return to Table of Contents.
P.A.C.E. News
Press Release
FOR IMMEDIATE RELEASE:
September 26, 2002
P.A.C.E. Ranked #4 On List Of Fastest Growing
Private Companies In San Francisco Bay Area
San Francisco, CA -- The San Francisco Business Times
today honored the top 100 fastest growing private companies in the
San Francisco Bay Area. P.A.C.E. ranks #4.
Awards Ceremony And Reception At Fairmont Hotel
The CEO's of this elite power group of 100 were honored
at a reception on Sept. 26, at the fashionable Fairmont Hotel high
atop Nob Hill in San Francisco.
To be included on the list the companies must have
been independent, privately-held (not a subsidiary or division),
and headquartered in Alameda, Contra Costa, San Francisco, Marin
or San Mateo county.
Companies were ranked on percentage of revenue increase
from fiscal year 1999 to 2001. P.A.C.E. earned the number four position
by posting growth over the period of 528%.
James R. Ziegler, Ph.D., founder and Executive Director
of P.A.C.E., accepted the award on behalf of the entire P.A.C.E.
staff who he credits with creating and maintaining the loyal support
of P.A.C.E.'s many consultants and corporate clients.
"Our consultants and corporate clients trust us,"
says Dr. Ziegler. "You can't buy trust, you have to earn it.
We earn trust by practicing full disclosure in everything we do,
and we earn trust by charging less and delivering more than ordinary
staffing vendors."
Dr. Ziegler adds, "When we say that 'P.A.C.E.
gives contract professionals the best benefits package available
to any employee in any company in the USA' that is not just a slogan,
it is what we do. It is interesting that rapid growth is not our
primary concern. Being the best employer of record in the nation
is our primary concern. It's just that being the best has resulted
in major growth."
When asked about the recent crisis in executive leadership
Dr. Ziegler commented "I am proud to be able to say that P.A.C.E.
is successful because of our honesty and integrity, not in
spite of it. We will never compromise our integrity."
About P.A.C.E.
P.A.C.E. Offers A Unique
And Valuable Service
The growth of the staffing industry (temp agencies, recruiting
firms, professional employment organizations) poses a huge threat
to the benefits of temporary employees and contract professionals,
and to full-time, regular employees who are converted to agency
temps. Essentially, staffing vendors hijack the employee labor load
to fund their profits and operations, leaving the contractor with
virtually no benefits.
James R. Ziegler, Ph.D. developed the unique P.A.C.E. business
model in 1998 to counter that threat by showing both contractors
and the companies that use their consulting services how to connect
with one another directly, and thereby disintermediate the expensive
and abusive staffing vendors.
- The P.A.C.E.
ProTrac business model, with its low margins and superb benefits,
makes it possible for contract professionals to obtain the best
of all possible worlds: All the freedom and financial advantages
of self-employment, all the security and continuity of corporate
employment, and the best benefits package available to ANY employee
in ANY company in the USA.
- The P.A.C.E.
ProTect business model, offering the first and only attorney-validated
and attorney-endorsed co-employment risk management solution in
the USA, makes it possible for client companies to direct
source their contingent workers and finally wrest control of their
contingent workforce back from expensive and ineffective staffing
vendors.
P.A.C.E. grew out of Dr. Ziegler's experiences as the author of
The Contract
Employee's Handbook, a hugely popular, free, online resource
for contract professionals. The success of P.A.C.E. Is a testament
to the increased awareness among contract professionals and the
companies that use their consulting services that there are effective
alternatives to ordinary staffing vendors.
P.A.C.E. offers its unique Employer of Record and Co-employment
Risk Management Services in all 50 states.
P.A.C.E. publishes The Contract Employee's
Handbook, www.cehandbook.com.
Written and maintained by its Founder and Executive Director James
R. Ziegler, Ph.D., The Contract Employee's Handbook is a free, award-winning,
online resource for technical and professional contractors in the
United States.
P.A.C.E. also publishes The Contract Employee's
Newsletter, another free resource containing timely news
and articles of interest to all contract processionals.
More information may be found at www.pacepros.com;
e-mail: admin@pacepros.com,
or call (925) 680-0200.
Contact Information
P.A.C.E. – Professional Association for Contract Employment
Employer of Record Services
1355 Willow Way, Suite 244
Concord, CA 94520
(925) 680-0200
www.pacepros.com
www.cehandbook.com
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.
Return to Table of Contents.
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.)
Return to Table of Contents.
Copyright and
Publication Info
Copyright (c) 2003, 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
CENewsletters@pacepros.com
Return to Table of Contents.
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.
Return to Table of Contents.
Subscribe to The Contract
Employee's Newsletter
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Return to Table of Contents.
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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