When can I renegotiate a contract?

Question:

I recently accepted my first position as a contractor. I officially work for a "consulting" company, but my contact is pretty much limited to them handing me a paycheck. My client is a huge company with many great challenges, and I'm getting lots of kudos from the bosses.

 

Here are my questions:

 

I believe I negotiated a poor pay rate. When I asked for the bill rate, they evaded me?claiming it hadn't been determined yet. How can I force the issue? What should I expect as a fair percentage?

 

My contract states that if I go to work for the employer directly within 12 months of my start date, the recruiter gets $20,000. Can I refuse to agree to renew this option when my first six months are up? That way, if the client does hire me after the first year, I would get a signing bonus rather than have that money go to the recruiter.

 

I'm not very good at negotiating (as proven by my poor pay rate), but the client loves the work I'm doing and would not look kindly on the recruiter trying to replace me. I've thought about hiring a business lawyer or professional negotiator to handle the details for me the next time. Am I crazy or just wising up?

 

Reply:

First of all, this is not "your" client. Your employer has a business relationship with both the client and you. Thus, your employer (the consulting company) is in control. You work at the client site, but you have no contract with them?and thus no control. Make the wrong assumption about this, and you will get hurt.

 

Second, you're not working for a "percentage." The contracting company pays you a wage, and it's up to you to negotiate for what you're worth, as you would with any employer. You'll get better at this with experience.

 

If I were you, I'd want to know what the billing rate is, too. However, it's actually none of your business. You could embarrass yourself by asking the client for that information. What matters is what you're being paid?and don't think of it as a percentage.

 

If this offends you, ask yourself this question: How much does the contracting company deserve for finding you and recruiting you, billing the client, paying your benefits, processing your paycheck and taxes, and marketing its services (you) in a very competitive market? Add it up and include a fair profit: That's what "their percentage" covers. Now, they may be "keeping too much," but that's not for you to say. Clearly, the client is happy. If you're not happy with them, quit. That's your choice.

 

So, forget percentages. What matters is what you're worth in this market, in this company, on this job. If you think you're underpaid, go negotiate a better deal with your actual employer. Negotiate respectfully, but fight tooth and nail for what you think you're worth.

 

If your supervisor likes and values you, you have more leverage. But don't be surprised if the contracting company pulls the rug out from under you. This is the risk you take when you accept a contracting job. The contracting company owns the relationship with the client?you don't. So please be careful.

 

As for refusing to renew the option, you can refuse to do anything you don't want to do. But be aware that the client's agreement may include terms you know nothing about. The client is likely prohibited from hiring you (without that hefty fee) for a year after your contract ends?no matter who ends it.

 

The contracting firm isn't going to give up that $20,000 easily. (Why should they?) If you quit, odds aren't good that you'll get hired as a regular employee by the client. Be careful. In my opinion, what you're suggesting is unfair and unethical.

 

Sorry if I sound like I'm beating you up. I feel for you?but don't confuse that with the business reality here. Companies use contracting firms because they don't want the fixed overhead of employees. They're willing to pay handsomely to essentially "keep you off the books."

 

A whole industry has grown up around that need, and you probably don't like the way it operates. But you chose to work this way. If you don't like it, negotiate a better deal, or go land your own great job. Those are your choices?the sooner you accept this, the less frustrated you'll be.

 

Best wishes (I mean it),

Nick Corcodilos

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