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Contract Employee's Newsletter
Helping Contract Professionals
Manage Their Careers
Vol. 3, No. 10
May 09, 2003
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 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.
News and Views
It Pays To Be Self-reliant
P.A.C.E. is not a recruiting firm
I am frequently asked if P.A.C.E. finds gigs for Contract Professionals.
The answer is "No." P.A.C.E. supports self-reliant contractors
who find gigs using their own wits through self-marketing of their
consulting services. P.A.C.E. also supports companies that want
to save huge amounts of money by direct-sourcing their contract
talent.
The P.A.C.E. Mission Statement says:
P.A.C.E. operates on the principle that independent Contract
Professionals and the companies that use their consulting services
will both benefit from an open, ethical, and evenhanded
alternative to traditional staffing vendors.
P.A.C.E. is neither a recruiting firm nor a placement firm. Rather,
P.A.C.E. provides back office support and employment for self-reliant
Contract Professionals who are willing and able to locate contract
assignments on their own.
But even agency temps benefits from joining P.A.C.E.
That said, if you do use a recruiting firm or placement firm (temp
agency, etc.) you can still come out ahead compared to employment
by the agency if you join P.A.C.E. and then let P.A.C.E. subcontract
through the agency. This is explained in our "P.A.C.E.
Agency Conversion Payroll Calculator".
Of course, if you do use an agency to locate your contract assignment
you will pay through the nose to the agency for its placement service,
but at least you can make a bad situation better by joining P.A.C.E.
for the best benefits package available to ANY Contract Professional
ANYWHERE in the USA.
You can check out all of the P.A.C.E. Payroll Calculators by clicking
the link for "P.A.C.E. Calculators" on the P.A.C.E.
home page.
Getting your own gig is best
Getting your own gig and then working through P.A.C.E. will save
you at least 20% of the billing rate compared with using an agency.
For example, if your agency bills the client $100 and pays you $65
per hour (which is a typical spread of 35%) then $15 goes to pay
the payroll overhead and the remaining 20%, or $20 per hour, is
profit. If you were to get the same gig on your own, and bill the
same $100 through P.A.C.E., that $20 per hour profit would be yours.
You would earn an additional $40,000 over the course of a 2000-hour
year.
Is it really worth $40,000 per year to you to use an agency to
locate contract assignments?
If I told you I would keep you employed, but you would have to
pay me $40,000 to do so, would you think that was a good deal? Or
would you rather invest a fraction of that amount to learn some
selling skills so you could market yourself to prospective clients?
Switch
to P.A.C.E. right now for the best possible employer
of record service and the best benefits package available to ANY
Contract Professional ANYWHERE in the USA.
Return to Table of Contents.
Ask Dungaree Dan
Duties And Rights, And Health And Safety, Etc.
Q: Dear Dan -- What are the responsibilities of contract
workers? More specifically, duties and rights, and health and safety,
etc. Thank you for your time and consideration.
-- Signed: D.J.
A: Dear D.J. -- If you are a self-employed independent contractor
your responsibilities are the same as for any other
vendor of professional services.
If you are an agency employee your duties and rights
are the same as those of any other full-time, salaried, fully benefited,
regular employee.
Regardless of your IRS tax status (W-2, 1099, corporation, LLC),
if you work on premise, and do the same work performed by regular
employees, under the supervision of the client's employees, then
you are a common law co-employee of the client, and the client must
treat you with the same respect as one of its own regular employees.
Check out the links below for some insight into these issues:
Here is a link to the results page at http://www.Google.com for
the keywords <EEOC
temporary>.
EEOC regulations apply with respect to co-employees of the client,
including independent contractors and agency temps, just as they
apply for the client's full-time, salaried, fully benefited, regular
employees.
Ditto for the keywords <OSHA
temporary>. Employers are likewise responsible for ensuring
the safety of their temporary co-employees.
Here is the link to an article I wrote called "Bulletin:
Are Your Approved Staffing Agencies Setting You Up For A Class Action
Lawsuit?".
This article argues that staffing vendors expose their clients
to EIRSA penalties and class-action lawsuits for back benefits when
they give their temps worse benefits than their clients give to
their own employees.
And this article, "White
Paper: Someone Else's Employee", gives a pretty good overview
of the topic. The paper discusses some of the issues of co-employment,
as does Chapter 1 of the Contract
Employee's Handbook.
As you can see, the entire subject of "duties and rights,
and health and safety, etc." revolves around the determination
of co-employment. This is precisely why P.A.C.E. is now offering
P.A.C.E.
ProTect with ComplianceSecurityTM to employers with
contingent workers.
P.A.C.E. ProTect with ComplianceSecurityTM tracks,
manages, issues alerts, and generates reports on every conceivable
risk factor associated with a company's contingent workforce: Tax
risks, ERISA risks, EEOC risks, Retroactive Benefits risks, Title
VII risks, ADA risks, Unemployment risks, Permatemp risks, OSHA
risks, Security risks, Workers Compensation risks, Intellectual
Property risks, Visa risks, and the list goes on and on.
If a company's Legal Counsel can identify a co-employment risk
factor, P.A.C.E. ProTect with ComplianceSecurityTM will
manage it.
As the nation's first and only digital division of employment for
the contingent workforce, ComplianceSecurityTM provides
the strongest possible affirmative defense against reclassification
and class-action lawsuits related to worker compliance.
-- 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
Computer Consulting 101
Are you a computer consultant for small businesses? Well, even
if your specialty is in another area the e-books at this Web site
will probably help you immensely in marketing your consulting services
directly to clients.
The
Computer Consulting 101 Web site promises to teach you how to
sell more computer consulting services, boost your computer consulting
profits, and grow your computer consulting practice.
This e-book sales site features a number of Computer Consulting
Training Resources for Small Business Computer Consultants. The
e-books and audio tapes are relatively inexpensive, and they promise
to deliver valuable information that you cannot afford to ignore.
Among the titles offered are:
- The Ultimate Service Agreement
- Sales Call or Initial Consultation?
- Computer Consultant Marketing #901
- Project Management for a Major Small Business Systems Upgrade
- The Secret Formula for Small Business Computer Consulting Success
- How to Find New Clients in Difficult Times
- Partnering with Other Computer Consultants
- Subcontracting Success
- How to Make the Leap from Corporate IT to Small Business Computer
Consulting
This is not an advertisement, and I do not endorse these products.
I just thought they looked worthwhile and wanted to pass along the
information. Let me know what you think?
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.
Nonexempt employee
A nonexempt employee is one that the Fair Labor Standards Act (Fed
Wage/ Hours Act) defines as an employee whose hourly wage or salary
level and job content meet the strict requirements of the law and,
therefore, qualify to be paid overtime. In contrast, an exempt employee
is "exempt" from premium overtime pay.
Whereas low-paid agency temps generally qualify as nonexempt employees,
and therefore qualify for premium overtime, high-paid contractors
generally do not.
Independent contractors are businesses, and not employees, so the
distinction between nonexempt and exempt employee does not apply
to independent contractors.
Occupational Safety and Health Act (OSHA)
OSHA is the primary federal law establishing safety standards in
the workplace. Under OSHA employers must provide a safe workplace.
OSHA mandates that employers inform employees about potential hazards,
train them to deal with hazards, and record workplace injuries in
a special log. Generally speaking, the client is responsible under
OSHA for ensuring the safety of staffing agency employees working
under the client’s supervision unless the staffing agency provides
onsite supervision of its employees. Companies are also responsible
under OSHA for ensuring the safety of independent contractors working
under the general supervision of the client.
Offer, acceptance, and consideration
Offer, acceptance, and consideration are the three essential elements
without which no contract can be formed. The offer represents the
terms of a contract. For an offer to be valid there must be serious
intent, communication, and definite terms. Acceptance is the agreement
that the terms of an offer are acceptable to both parties of the
contract. Acceptance occurs when both parties sign and date the
contract. For this reason, it is usually difficult to prove acceptance
of an oral contract.
The concept of consideration goes to the core of contract law.
Consideration is something of value to the parties making a contract.
A contract is founded on the exchange of one form of consideration
for another. For example, a Contract Professional may agree to develop
a software application in return for the consideration of $150 per
hour. The client agrees to pay $150 per hour in return for the consideration
of a properly functioning software application. Each party provides
something of value to the other party in exchange for something
of value received. To be legally binding, a contract or a contract
clause must show consideration.
Off-site contract
A contract assignment where the Contract Professional works from
a location remote from the client’s facility. For example,
working from home or from a beach in the Cayman Islands.
Return to Table of Contents.
P.A.C.E. News
Why P.A.C.E. Charges A Fixed Percentage
Here is an excerpt from a recent e-mail we received that asks why
P.A.C.E. charges a fixed percentage instead of a flat
rate for its employer of record services.
Hello,
I’ve looked over your information and do have some interest
in P.A.C.E. services. However one significant item seems to stand
out to me.
If you are charging a flat fee of 5% of the gross wages of
your division managers, why would your services be an equal benefit
to someone who bills out at $50/hr. as opposed to someone who
bills out at $80/hr.? It seems that your costs of managing clients
would remain relatively fixed regardless of how much they bill
through you.
Now, on the other hand, it appears you have got a really good
concept going here, and no doubt many people have benefited by
the intention of this creation. Thanks for your consideration.
The following hypothetical e-mail from a hypothetical contractor
explains why P.A.C.E. charges a fixed percentage:
Hello,
I’ve looked over your information and do have some interest
in P.A.C.E. services. One significant benefit of P.A.C.E. really
stands out to me.
My current agency is charging me a fixed fee of $500 per month.
It seems inherently unfair to me that they should take 10% of
my billings of $5,000 per month, yet they take only 5% of billings
from someone else who is fortunate enough to bill $10,000 per
month. They seem to be discriminating against me because I only
bill $5,000 per month.
What I really like about P.A.C.E. is that you charge a flat
5% for everyone regardless of how much they bill. For example,
in my case your 5% fee would work out to only $250 per month for
all that you do for me. Also, as I earn more, you still only take
5%, unlike the IRS that charges a higher percentage for income
taxes the more money I earn.
I really don't mind that you take a larger dollar amount of
money if I invoice more because:
- I can afford the higher dollar amount since I am making
more money when I invoice more, and I appreciate that you
don't penalize temps and contractors who invoice less than
I do.
- I understand that the cost of payrolling overhead, the
cost of general liability insurance, and errors & omissions
insurance, and the cost of your FREE long term disability
insurance (What a really great benefit for Independent Professionals!)
are charged to P.A.C.E. as a fixed percentage of wages, regardless
of how much the wage is,
- The fixed costs (rent, salaries, etc.) of processing
an invoice, plus the costs of collections, payroll preparation,
and benefits administration are such that P.A.C.E. actually
loses money when a contractor invoices less than $2,000 per
invoice, and that the higher dollar amount charged to higher-billing
contractors compensates for the low net profit that P.A.C.E.
receives from lower-paid temps and contractors,
- And, finally, I understand and fully appreciate that
higher-paid consultants use the labor intensive expense reimbursement
program, and also tend to negotiate more contracts and more
complicated contracts than lower-paid temps and contractors.
For all of these reasons it makes perfect sense for me to
join P.A.C.E., and also to recommend to my friends and colleagues
that they also join P.A.C.E., not only because P.A.C.E. offers
such a great service, but also because I will receive a 1% referral
rebate for each person that I refer to P.A.C.E., thereby reducing
the cost of P.A.C.E.'s services to the point where P.A.C.E. is
actually completely free or even better than free.
You have got a really good concept going here, and no doubt
many people have benefited by the intention of this creation.
Thanks so very much for your consideration.
Sincerely,
A Very Appreciative Contractor
~*~*~*~*~*~*~
Virtually all staffing vendors (temp agency, recruiting firm, placement
agency, etc.) operate on a fixed percentage, but unlike P.A.C.E.,
which virtually never takes more than 15% of the billing rate, temp
agencies and recruiting firms almost never take less than 35% of
the billing rate.
Did you know that even if you are currently contracting through
an ordinary staffing vendor the chances are that you will make more
money and receive better benefits by joining
P.A.C.E. immediately.
It's simple. You join P.A.C.E., and then P.A.C.E. subcontracts
corp-to-corp through your original agency. The client still contracts
directly with the original agency. The agency breaks even in the
deal. And you receive higher total compensation and the Best
Benefits Package Available to ANY Contract Professional ANYWHERE
in the USA.
The P.A.C.E.
ProTrac Agency Conversion Payroll Calculator shows how it works.
Just click the link in the previous sentence, or go the the P.A.C.E.
Home Page and click on the link for "P.A.C.E. Calculators".
There you will find several calculators designed for different contracting
scenarios. Select the link that says: "P.A.C.E. ProTrac Agency
Conversion Payroll Calculator".
Prepare to be amazed.
Switch
to P.A.C.E. right now for the best possible employer
of record service and the best benefits package available to ANY
Contract Professional ANYWHERE in the USA.
~*~*~*~*~*~*~
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 Contract Professional
ANYWHERE 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. We encourage you to freely
distribute hyperlinks to this issue of the Contract Employee's Newsletter.
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.
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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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