While accepting a contract position at a tech company may be tempting, it’s important to know exactly what you’re getting into before signing that contract. Even though the pay and resume-building experience might seem worth it (and very well may be), understanding the pros and cons of the contract position is essential.
As former contract worker and owner of Volare Systems Joe Wilson explains, “You need to figure in paying the other half of your FICA that an employer would pay if you were an employee. You need to figure in the cost of holidays, vacation days, and sick days over the duration of the contract. You need to think through how you will get and pay for health insurance, life insurance, disability insurance, and any other perks an employer might provide.” Wilson adds, “Finally, when contracting, there are times you are not working on a project, and you are looking for your next project. All these factors need to be added into your rate.”
Patrick Navarro, Executive Vice President of Jefferson Frank, states, “As a contracted tech professional, you want to ensure you only pursue projects that benefit your career, work around your lifestyle, and remunerate you according to your value in the market.”
Navarro continues, “My advice would be to use the interview process to ask questions regarding the aims and objectives, length and complexity of the project as a whole, their perception of the role they’re looking to fill, their position on remote working and Flexi hours–finally, their view on the technical landscape and how it will affect their business. So by the time you’ve been offered the position, you have a full grasp of the project and your obligated duties. If you’re going directly to an end customer, the rate is something you’ll need to discuss; otherwise, this is best left to your agent.”
SEE: 5 questions software engineers should ask in an interview (TechRepublic download)
“I would also recommend utilizing your interview questions to learn more about the company and try to establish a potential working relationship with the hiring manager. Even if you don’t land the project, you’ve still made a good impression that may work in your favor for future projects,” says Navarro.
Author’s note: The information for this article was received prior to stay-at-home orders issued due to the coronavirus pandemic.
More questions contract workers should ask before accepting a position
Shayne Sherman, CEO of TechLoris, has worked as a contractor and has hired contract workers for his own company; he suggests starting with the basics.
- Is this a remote position?
As Sherman explains, “To some, it may seem a bit overreaching to ask if you can work from the comfort of your own home, but this is becoming not only accepted, but expected… . Many companies seeking contractors may welcome this as it wouldn’t require them to set up a temporary work station for you.”
- What are the working hours?
“If you’re working remotely, it can be really easy for your hours to fluctuate greatly, to the point where you’re logging off as they are clocking in. Determine when you’d be expected to be available,” recommends Sherman.
- Who is providing the hardware?
Sherman states that this question is especially relevant for developers. “Understanding the development environment is very important… . If they are not providing the computer, make sure your machine is compatible. If they are, make sure you understand how to get the machine and the restrictions associated with its use.”
Will Bachman advises independent contract and gig workers how to navigate the new world of working for yourself and is the co-founder and managing partner of Umbrex, a global community connecting top-tier independent management consultants. Bachman suggests independent contract workers ask the following questions.
- If the firm decides to end my contract early, what is the minimum notice will you commit to provide?
- What are the payment terms?
- Will I be required to work a set schedule? Or can I work on my own schedule as long as my work is done on time?
As Bachman explains, “One potential advantage of working as a contractor rather than an employee is that companies may provide more flexibility of schedule as well as the location of where the work is done.”
- Will I be able to serve other clients as long as that does not interfere with completing the work I’ll commit to deliver for you?
“One advantage contractors have is that the organization may be open to allowing contractors to serve other organizations, while employees may be forbidden from doing so,” says Bachman.
Soren Rosenmeier, CEO and senior partner of German-based contacting agencies Right People Group and Onsiter, which specialize in placing contract workers in the tech and finance sectors, recommends asking the following questions.
- What is the termination period of the contract for both parties?
As Rosenmeier explains, “The termination period is important, as the contractor normally needs a period of one to two months to find the next project. This is best done in parallel with the finalization of the contractor’s current project. If the project is terminated with immediate notice by the customer, the contractor will often have a period of 1-2 months without income resulting in a high financial loss.”
- What are the invoicing agreements for traveling done as part of the contract?
Some positions may require contract workers to travel. According to Rosenmeier, “The actual cost of transportation (e.g., tickets) is normally covered by the customer, but in many contracts, it is unclear whether the contractor can invoice the actual time spent on transportation. In some cases, this can mean a difference of 20-30% of the invoiced amount, and therefore this is highly important to clarify in the agreement.”
- What is the agreement for intellectual property rights made as part of the contract?
“Some tech companies have very strict legal terms for the intellectual property made as part of the contract, putting very high restrictions on what the contractor can do in his/her next assignment,” says Rosenmeier. “Especially for contractors specialized in a niche technology domain or sector, it is highly important that they are not prohibited from working with these type of customers or professional areas in the next contract.”
- What are the success criteria?
Rosenmeier explains that this is important because “tech companies are often growing and changing rapidly and therefore the success criteria can easily change over time, and different executives and the customer can have different perceptions of what the success criteria for the contractor’s work are. Therefore, it is an excellent idea to formalize the high-level success criteria in the contract.”
Will Ellis, founder of Privacy Australia and an IT security consultant, suggests asking the following questions.
- How will we be setting up a contract?
“In some cases, companies don’t want to set up contracts, as this allows them to stop utilizing the work of a contractor whenever they want. This is an issue for the contractor, as it can put them in a bad position in terms of their income for the month.”
- What forms of security do you implement to protect contractors as well as the company’s data?
“This is a great question, as it not only gives you insight into how you will be protected but will show the company that you care about their data and the protection of it.”
According to Hailey Burkett, director of career advising and relationship management at Vendition, another important question for contract workers to ask is: Will the position turn into a full-time employment role? As Burkett explains, “Not all contract roles convert into [full-time positions], and it is important to know whether or not that’s a possibility before accepting the role. Some people are okay with short-term contracts, but others are looking for an opportunity to prove themself and receive a full time offer at the end.”
Subscribe to the Executive Briefing Newsletter
Discover the secrets to IT leadership success with these tips on project management, budgets, and dealing with day-to-day challenges. Delivered Tuesdays and Thursdays