by Paul Dughi, a contributing writer on the Opterre team.
- As an employee, your position is becoming less secure
- As an independent consultant, you will be able to negotiate terms and conditions with your clients that you would not be able to do as an employee
- A contract provides protections for both sides
- There are key clauses you need to include in a contract
Being an employee can mean your job and financial well-being is at the whim of your employer. Laws and recent court rulings are constructed to benefit businesses and limit your rights as an employee.
A recent Supreme Court ruling took away some key negotiating rights for employees. In a 5-4 ruling, the court dealt a blow to labor when it ruled companies may require employees to settle disputes over their jobs by using individual arbitration. Such a requirement would prevent employees from banding together with co-workers to bring claims in collective action. That pits you as an individual upon against a larger employer that likely has deeper pockets and more resources to fight.
“The risks of employer retaliation would likely dissuade most workers from seeking redress alone,” wrote Justice Ruth Bade Ginsburg in her dissent.
“Right to Work” laws also hinder collective bargaining. It prohibits requiring an employee from being forced to join a union to take a job. While it may save some money in union dues, it also means your employment is an individual agreement with your employer. You have a lot less leverage than if you had a collective agreement that negotiated terms on behalf of all employees.
“At Will” provisions allow an employer to terminate your employment for any reason, at any time, as long it is not illegal. Employers can’t discriminate against you for race or religion, but they can end your employment any time they want.
Another recent Employment law court ruling gave employers more power by deciding employers don’t have to pay you for some things you are required to do as part of your job. In this case, workers at Amazon were required to go through security checks before they left at the end of their shift to make sure they weren’t stealing. At times, the wait to get checked could be nearly half an hour. The Supreme Court ruled that since that work isn’t “tied to the productive work that the employee was employed to perform,” the company didn’t have to pay employees for the time.
There are other options.
As an independent consultant, you have options that employees do not have. You have the right to work and how to work. You can agree to take on a job or pass it up. You can subcontract the work to others. By creating a written contract, you can negotiate the terms and conditions for your services.
Working as An Independent Consultant
So, you are now working on your own as a business owner and/or independent consultant. Unfortunately, most of us weren’t taught how to draw up contracts in school. Working without a contract opens the door to abuse. Businesses that you do work for can refuse to pay you in a timely manner, reject the work you’ve done, or change the terms to which you’ve agreed after the fact. Putting things in writing helps keep everyone honest by detailing deliverables, timetables, acceptance, and payment terms.
You may hear “contract” and think you need legal help. You might. In most cases, though, clearly expressing what both sides agree to do in simple terms will work.
How to Write A Contract
Please note that we are not lawyers. Do not take what you’re about to read as legal advice, but as business advice. When you are ready to draft a contract, please check with a lawyer who’s an expert in the field.
Contract management prevents problems. Here are the most important things to include to protect yourself:
What You Will Charge
Whether you charge by the job or by the hour, it’s important to list your fee and how to pay your invoice. In the case of an hourly rate, some companies may require you to estimate the number of hours or promise a “guarantee not to exceed” clause. Make sure you don’t short yourself by providing a reliable estimate. Another alternative is to put limits on an hourly rate. This estimate might include both a minimum number of hours as a base fee, as well as the maximum number of hours you will charge.
Scope of Work
One of the most critical parts of the contract will detail the scope of work you will provide. You want a clear understanding of what you will do so that when they ask for something beyond the initial scope, you can charge additional fees or bill for extra hours.
Often clients won’t know exactly what they need when they start a new project. It’s easy for them to ask if you can take on that one more thing. You should include language that allows you to adjust your rates or hours if the job changes.
Once a project is underway, you want to have an agreed upon process to revise the scope of work. By requesting a written change order, you will have a way to track the request and prove that both parties agreed on a reasonable adjustment to the project, which may lead to additional fees or a change in deadlines.
Make sure to explain your expectations for payment(s). Do you want payment in full up front, a down payment before beginning work, progress payments, or is a lump sum OK after job completion? There is no right or wrong answer. However, you do want to avoid confusion.
You also want to detail the form of payment. Do you take credit cards? or do you need a check? Find out what the customer prefers and do that, if you can. Some may accept the contract, some may need to issue a Purchase Order, and some may require an invoice from you.
It’s also important to explain when payments are due and the consequences for failing to make timely payments. Some consultants opt to include a late fee to encourage prompt payment.
Who Will Be Your Point Of Contact
Request a single point of contact at the company to make sure you don’t get requests from multiple people at the company. It is much easier to work through one person and discuss any changes or issues than to be at the whims of a group. When several people work on a project, they may ask for things that are outside the scope of the agreement, and you might get stuck paying those expenses if you or the team didn’t get approval. It also keeps you out of internal politics that may slow the project.
Termination or Cancellation
What happens if the business decides to terminate the project before completion? For your protection, a common tactic is to provide a “kill fee” or an “early termination clause” that predetermines what you get paid if they pull the plug. You don’t want to put yourself in the position of doing work and not getting paid for it.
Ownership of Work
Depending on your chosen field, you may not own the work of finished projects. If you are a freelance writer or coder, you need to spell out who owns the copyright of the work and whether you can use it for anything outside the agreed upon use. If you are a contractor or builder, who owns the rights to the design? Can you use the work product for other clients?
Both sides need a firm understanding of deadlines and any flexibility in delivery. Make sure you have ample time to complete the project given your workload. Some companies will require penalties for missing the mark. You always want to hit your delivery dates to avoid getting a reputation for promising more than you can deliver.
Contracts Protect Both Sides
These are the most common and critically key sections to your contract. You may need to include others. Discuss those with a lawyer. But the whole point of a contract is to protect both sides. By having a clear understanding of what you both have agreed on, both sides will benefit and avoid frustrations.
If you want more insider help to draft a great contract, please make an appointment here.
About Paul Dughi
VP/General Manager at WAAY-TV (ABC 31 Huntsville, AL) | Named one of Local Media Association’s Media Influencers | Named one of Broadcast & Cable’s Digital All-Stars “on the front lines of transforming the broadcast industry.” View all posts by Paul Dughi