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| Subject | Author | Pepin
Unregistered User
(5/17/00 10:49:42 pm)
Reply | Edit | Del All | Info needed ASAP
Well, I thought I had a corp-to-corp contract all nailed down. Then when I get home tonight
the bork e-mails me that the clause that says "We will not pay you until the client pays us"
has to stay in the contract because it is a legal requirement. I think that is a lot of nonsense,
but I am not sure. Does anybody know about this?
What the agency is promising to do is give me an "advance" against my invoices
net 15 days.
Of course, I am supposed to report to work tomorrow AM and, of course also, my bork
and all his buddies will be out playing golf tomorrow and so will be unavailable. How
convenient.
Now some of the questions I am asking myself, and I an wondering if any of you has
ever run into a similar situation and thus has any input to offer, realizing, of course,
that there are no lawyers here and that all these things may depend on the laws
of my state, California.
Of course, eventually I plan to ask them of a lawyer, too, but it is late at night and at this
time I can't really get hold of a lawyer
(1) How would I know when the client has paid the agency, so that I know for sure that
the money is REALLY my corporation's and not an advance?
(2) To compound the issue, my bank told me recently when I was inquiring if a check had
cleared that that only meant that it had NOT bounced within the bank's prescribed
period for "clearing" but it did not mean the check had been paid. They told me that
the only way to KNOW if a check has really cleared is to call the issuing bank with all
pertinent informatioin.
(3) My contract has a mutual 30-day termination notice. I wonder if non-payment
would be sufficient reason to allow me to break the contract. Maybe, maybe not???
(4) I am asking the shop to also tell me what their contract with client says in case
of non-payment with the client. Since my contract with the shop is contingent upon
performance by the client, it only seems fair to me to be able to know this. They, of
course, will most likely not see it that way.
Now, i had a great interview with the client, the job is, I think, not too stressful, with a
relatively decent rate ( not the greatest ), and I have dealt with this bork once before.
That, of course, is no guarantee of honesty.
What I plan to do is e-mail him my quetions. I already phoned him to tell him that I plan
to show up for work tomorrow ( without a contract ), and that when we meet Fri I
expect to get some answers from him ( before we sign the contract ). I also told him that
if we do not come to an agreement, I would be happy to absosrb the loss of a day-and-a-half
and come home. Since i live right here it is not a big deal for me.
Any thoughts?
the pertinent information and then see if it had, indeed been paid.
| RMP
Local user
(5/18/00 12:13:47 am)
Reply | Edit | Del | Re: Info needed ASAP
Yep, they're screwing around with you, getting you to work without a contract and/or only with their contract. Sounds like the NACCB Standard Contract. A copy of one broker's version of this, along with my suggested changes, is at rmpcp.com/naccb-contract-mod1.doc and the broker totally refused to deal with us after receiving this version. There are other brokers out there.
Their "legally required" excuse is based on their alleged understanding of 1706. It's just one of the 20 factors, so it's not that cruicial. That's just their excuse. At least we're honest about why we can't pay until we get paid, it's because we're small and low overhead - and we even offer to overcome that using our factor.
When you get to your client site, you should immediately tell the client that you came to start because you're a professional and you value the client, but that the broker is being a bit difficult on the contract so if you have to leave, it's because the broker's being unreasonable.
Robert M. Pritchett,
President - RMP
Consulting Partners LLC
People -
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| David Cressey 
Global user
(5/18/00 12:14:03 am)
Reply | Edit | Del | Since you are in a hurry...
...here's my answer.
I'm thinking you will get a more informed response from someone like RMP or one of the other corporate types in the morning.
To my knowledge, these is no such thing as a "legal requirement" that they not pay you until they get paid.
On the other hand, this is a point that I've never seen a broker yield on, not even my favorite broker.
They basically aren't paying you with their money. They are paying you out of the client's money. So if the client ends up refusing to pay, they want to pass that risk on to you. And they don't want to borrow money at a bank to pay you in advance of the client's payment.
It's conceivable you could get them to give ground on this score. After all, everything is negotiable. But if you succeed, you will have negotiated something I've never been able to get from them.
When all goes well, the net effect is that your payments will run about 4 weeks late. If you can stand the cash flow, it will work out all right. The last time I ended a contract, there was about $10,000 in the pipeline, which
I ended up receiving over a four week period.
And, by the way, I got it all. They didn't short me one dime. I've heard of outfits that hold up on their last payment to you, but that's never happened to me, except one time when the middleman went out of business owing me money.
Although I prefer 1099 dealings, there are some advantages to being a W-2 "employee" of the broker. Under those terms, they have to pay you within some number of days determined by law, even if the client has not yet paid them. And, if they go belly up, claims for wages take precedence over business debts.
Essentially, if you are going to do business on a business to business basis, expect about a 4 week delay in turning receivables into cash. And expect about 3% of your receivables to end up uncollectible. Adjust your rates accordingly.
At least that's my 2 cents. I look forward to reading the other regulars' replies.
Regards,
David Cressey
Not all those who wander are lost.
| David Cressey
Global user
(5/18/00 12:26:48 am)
Reply | Edit | Del | I won't start without a contract.
I just noticed that little bit in your original message, the bit about starting without a signed contract.
I did that just once. My opening day got all screwed up in contract negotiations over the phone, the client got a bad impression of both the broker and of me. Things went downhill from there.
Never again, for me.
The unavailability of your broker is almost certainly a ruse. If it takes negotiating a contract with you to get you to the customer site, he'll can the golf, or he'll have a delegate negotiate a contract with you.
Also, the fact that you didn't see the contract until the day before start day is almost certainly planned that way. The idea is to prevent you from changing anything in the contract. Don't fall for it.
Regards,
David Cressey
Not all those who wander are lost.
| Pepin
Unregistered User
(5/18/00 1:18:08 am)
Reply | Edit | Del | I talked to my lawyer!!!
Well, the longer I thought about it, the less I liked the idea of accepting the broker's
excuses. So I called my lawyer ( the fact that he happens to be pretty close to being a
personal friend helped, but I still felt embarassed about disturbing him at 9:00 pm ),
however, he was most gracious.
In fact, he is an expert in negotiations and he is a contractor himself, so that also helped.
Here is what he told me:
(1) There is absolutely no legal requirement that a corp-to-corp contract carry the
requirement that one of the parties does not get paid until the other gets paid by a
third party. His statement: "At best the agency is being ignorant ( bad news ) and at
worst they are lying to you ( worst news )".
(2) There may be a number of reasons why the agency's client may choose not to pay them
all or part of an agreed upon fee. For example, the agency may have lumped together a
number of contractors or a number of jobs in a requiremente with the client, and
client's payment may be dependent on the over-all performance of this coterie of people. I
would have never thought of that!
(3) I would have to be allowed to examine the contract the agency has with the client to see
under what conditions they can refuse payment.
(4) I was also advised that my best course of action would be to request from the agency
payment, in advance, for the number of hours I would be expected to work each week, and
further stipulating that this would go on throughout the life of the contract, with any shortfalls
on a weekly basis, on either part, due within five days.
After all this is said and done, I was still ruminating about whether I ought to show up for
work tomorrow, so as to maintain the relationship with the potential client, when I happen
to be talking to my good buddy Jim, who is a mechanic and could care less for computers,
and when I start telling him what is going on he looks at me with total incredulity and says:
"What, you are going to waste hours of your life and not know if you are goig to get paid?,
Who in his right mind would do that?" I guess sometimes it takes a person far removed from
our area of operations to see things quite simply and clearly.
So i have learned one more lesson. No contract, no work, no exceptions. Period.
I'm staying home tomorrow ( and I will call some more snakes ). I'll talk to the broker Friday
and if I can't get what I think I need, its curtains for those folks.
| Pepin
Unregistered User
(5/18/00 1:23:25 am)
Reply | Edit | Del | Ah, yes NACCB.
Several agencies here in SF ( not NACCB members ) seem to be taking something similar to a "standard" NACCB contract and making changes to it and then using that. As a matter of fact,
the contract I am talking about seems to be a modification of an older version of an NACCB
contract.
I also had an NACCB shop biggie yell at me today, he did not want to waste his time
with me unless I told him I was ready to sign his contract. That ws too bad for him
for unbeknownst to him his recruiter ( who is a bit less abrasive ) had been trying to
sweet-talk me into (a) going to work for them after all and (b) giving him the names of
other foiks to meet their numerous reqs.
So I am back to square one, wiser now than just a few days ago.... Live and learn,
| 1Aussie1
Unregistered User
(5/18/00 1:37:55 am)
Reply | Edit | Del | Probably unneccessary to say this
But since you sound distictly pissed off, I would suggest you make a point of remembering to keep a cool head, when you speak to your bork. That way, the more the bork yells, the stupider he'll sound, even to himself eventually.
| Pepin
Unregistered User
(5/18/00 2:07:40 am)
Reply | Edit | Del | Pissed off? Not quite.
I guess i DO sound pissed off, more likely, reading my sob story is enough to piss somebody
off too. I am not really THAT pissed off, I am really just exhausted of dealing with all
these folks who present me with totally outrageous contracts ( after excellent interviews, and
after having promised me that the contracts are negotiable ). And I am smart enough to
be aware of the danger of negotiating, or doing anything, either under duress, or in a hurry,
or when one is not at one's best.
I actually left a quite civilized message for my broker, and antoher one for the client,
simply informing the client that some unforeseen glitch in the negotiations made it
necessary for me to postpone the start date until I resolved it. What I have now is like
a really bad taste in my mouth from all this cumulative crap of the last few weeks.
If the bork does not come through, I am prepared to walk, without getting too bent
out of shape. I'll just take a few days off and enjoy what passess for Summer here in
San Francisco.
| Webmaster Extraordinaire
Unregistered User
(5/18/00 3:28:46 am)
Reply | Edit | Del | Free labor is well free
After all this is said and done, I was still ruminating about whether I ought to show up for work tomorrow, so as to maintain the relationship with the potential client, when I happen to be talking to my good buddy Jim, who is a mechanic and could care less for computers, and when I start telling him what is going on he looks at me with total incredulity and says: "What, you are going to waste hours of your life and not know if you are goig to get paid?
Good friend work as FTE. He work many long hours, save many PHB's butt and get no OT. WebE look at him with strange uncomprehending look. He respond that the company make promises and he will quit if not rewarded (stock options, raise or both). WebE very confused now. Work already done then you ask for money???? Worse, it be play money (stock options) or a raise which means you will be expected to work even harder in the future.
WebE think many PHB's see win-win-win for PHB: work done, stock or raise not mean much if friend quit and PHB hire camel jockey to replace friend at lower salary. WIN-WIN-WIN.
WebE not understand the human condition.
| David Cressey
Global user
(5/18/00 5:17:39 am)
Reply | Edit | Del | Re: Pissed off? Not quite.
If you sounded a little pissed off to us, that's good.
If your message to the bork carried a balanced, professional tone, that's good, too.
As badly as you have been treated, it's by no means the worst story we have heard in this forum, especially when it comes to first contracts.
Congratulations on arriving at the: "no contract, no work, no exceptions" rule in such a short amount of time. If the client contacts you, just tell them you don't have a signed contract.
Guess who will look unprofessional to the client? Not you: the borker. And whose client is it? If you read that proposed contract over, you'll discover that it isn't your client at all. It's the borker's client.
I predict that you are going to see the unavailability of the broker for contract negotiations melt before your eyes.
Regards,
David Cressey
Not all those who wander are lost.
| David Cressey
Global user
(5/18/00 5:21:14 am)
Reply | Edit | Del | Re: Ah, yes NACCB.
The nice recruiter and the tough guy biggie is also a standard routine. It's like the "good cop, bad cop" team that they use to break down suspects.
They get assigned their roles. Sometimes, the recruiter is so naive as to be sincere in the nice person role. But the biggie who is yelling at you to do things his way "or else" is definitely sincere.
This is how these people make more money than we do off of our own work.
Regards,
David Cressey
Not all those who wander are lost.
| JBB 
Global user
(5/18/00 6:49:20 am)
Reply | Edit | Del | Re: Pissed off? Not quite.
I got around to reading this thread and agree with pretty much everything David has suggested. However, I do want to add a couple of suggestions.
Guess who will look unprofessional to the client? Not you: the borker. And whose client is it? If you read that proposed contract over, you'll discover that it isn't your client at all. It's the borker's client.
Yeah, the broker will probably look unprofessional. I'm guessing that if the broker goes back to the client without you in tow, the client is going to wonder why. Although its possible that the agency may accept responsibility to the client for not having you available this morning, its likely that the agency will somehow off-load blame for your failure to show up on you.
My suggestion is that if you can't move forward with a contract through this agency, don't use them. They have had their opportunity to place you with the client. You dealt in good faith, but they wouldn't negotiate an acceptable contract. Go to the client and explain the source of the problem.
Communicate with the client, let them in on the problem with the agency; however, don't disclose the rate you've agreed to with the agency unless the client asks. Here's why: if the client is willing to contract directly with you sans agency, you will need to obtain more money in your contract with the client than what you were asking for from the agency. If the client does ask what rate you were asking for from the agency, go ahead and tell them, but maintain the caveat that if you contract with them directly, you will be taking on additional risks and business expenses which will require a higher rate.
If David turns out to be correct on his prediction that the broker will change his/her tune and start negotiating, all the better. I'm guessing they will not, unless this client is just absolutely desperate to have you peform some work for them versus hiring someone else who may have similar qualifications. If they do turn out to really want you to perform the work, they may lean on the agency to do what it takes to get you in the door.
If the possibility of contracting directly with the client sounds attractive to you, and you've never had similar contract experiences in the past, you'll find many threads on this board that discuss how to go about it.
regards,
JBB
| Bob McIlree
Global user
(5/18/00 7:21:06 am)
Reply | Edit | Del | Very simple solutions
With apologies for regurgitating anything others have previouslyt posted.
1. No contract - no work. Explain this tactfully to the client and give an estimated time for the issues between you and the bork to be resolved. If the client doesn;t understand this, then I'd think twice about providing services there.
2. Your contract, and thus all of your legal leverage, is with the bork, not the client. Should you get stiffed because of client non-payment, you have no legal recourse against the client because you *don't* have a legally binding contract with them. Back when I was enslaved to borkdom, I made it chrystal-clear to agencies that they and they alone were totally responsible for payments and threw all of that pay-when-client-pays crap down the toliet. Never had a problem from them on this issue, and I would have walked if there was.
| Bob McIlree
Global user
(5/18/00 7:30:21 am)
Reply | Edit | Del | Belly-up & Wages
"Although I prefer 1099 dealings, there are some advantages to being a W-2 "employee" of the broker. Under those terms, they have to pay you within some number of days determined by law, even if the client has not yet paid them. And, if they go belly up, claims for wages take precedence over business debts."
In a bankruptcy proceding, employees owed outstanding wages are considered unsecured creditors by the court, and although they usually get to the head of the unsecured creditors line, any secured creditors (like the bank, bondholders, capital equipment vendors) get paid off first. The rest, including the employees, get any crumbs left that fall off the table, of which there are usually few, if any at all. That's cut-and-dried US Bankruptcy law.
In the case where the client goes belly-up, but the bork doesn't, and you're W-2, the bork has to pay wages in a timely mnner per state labor law regardless of what the outcome is collecting from the client.
| Terry
Local user
(5/18/00 9:56:19 am)
Reply | Edit | Del | It's just biz, chapter 2
Pepino,
I think you've handled this just about perfectly. Item 3 your lawyer friend told you about the various reasons a client might not pay is really telling. The client can't possibly get upset with you because you won't work without a contract. Hang in there and let us know how it turns out. Leaving civilized messages is the right thing to do and keeping the discussion focused on your requirements is exactly right.
| Bitter Old Timer
Unregistered User
(5/18/00 10:30:50 am)
Reply | Edit | Del | Check Clearing - One Strategy
Years ago when I contracted 1099 for a flake, I would take his check to his bank, get paid in currency (it was a very low newbie rate so it wasn't THAT much money) and walk it across the street to my bank.
That way my money was totally separated from his at once.
If your borks bank is convenient to you, you might consider getting a cashier's check from them for the amount each time. I don't recommend walking around with the amount of money a decent rate would involve - besides the paperwork of large cash transactions these days.
| Honest Guy
Local user
(5/18/00 11:35:45 am)
Reply | Edit | Del | So just say that
"They basically aren't paying you with their money. They are paying you out of the client's money. So if the client ends up refusing to pay, they want to pass that risk on to you. And they don't want to borrow money at a bank to pay you in advance of the client's payment."
The problem is that they lied to him. Assuredly the bork knows the law, so why couch it as a legal requirement? I think most folks working 1099 would understand the bork's reasons for not wanting to pay in advance.
But no, they have to go and lie about it. It's that damn frog and scorpion again.
| David Cressey
Global user
(5/18/00 12:23:48 pm)
Reply | Edit | Del | but see RMP's reply
...where he says that agreeing to pay in advance could be one of the 20 factors the IRS might use in reclassifying you as an employee of the bork. That was completely outside my knowledge when I posted the earlier reply.
(if you are lurking, RMP, I knew I would get something of value out of your remarks. I usually do.)
The ONE place where the bork's interest and my preferences line up perfectly is my stand against involuntary reclassification. In any reasonable world, a clause in the contract between you and the party that's paying you, to the effect that the contract is NOT an employer-employee relationship should completely settle the matter, and the buyer ought to be held harmless against reclassification by that one provision. AFAIAC that should be true whether the buyer is a client or a bork.
People who are contractors on the outside, but employees on the inside are never going to understand why I take that stand. People who are in business won't even have to ask.
Regards,
David Cressey
Not all those who wander are lost.
| Bob McIlree
Global user
(5/18/00 12:37:33 pm)
Reply | Edit | Del | Might use, but won't - a clarification
"where he says that agreeing to pay in advance could be one of the 20 factors the IRS might use in reclassifying you as an employee of the bork. That was completely outside my knowledge when I posted the earlier reply."
The 20 common law tests of employment refer to the "risk of payment or non-payment" or "whether there is a risk of loss" as a factor in determining independent contractor status. However, it says absolutely nothing about how payment risk is mitigated nor does it advise on what payment terms or collection techniques used by an IC qualify or disqualify an IC from such status.
The NACCB skewed this to their complete advantage when proffering the pay-when-client-pays clauses in their contract to mitigate their risk in the guise of the common law tests of employment. It is simple risk-shifting to the contractor with no real tax implications. Why? Because from the ICs point of view, there always exists payment risk (however small) from the agency whether the agency pays on time or not regardless of the payment history of the client to the agency. Example: you get stiffed by a bork even when the client paid up (I've seen this happen); your contract is with the bork, not the client, so you only have legal recourse to the bork. Risk of loss question in the common law test is satisfied not only because the bork didn't pay but *credit terms* were extended to the bork for services rendered.
Methinks, as does my CPA, that the IRS would buy that in an employment audit.
| Pepin
Unregistered User
(5/18/00 1:18:58 pm)
Reply | Edit | Del | Followup ( brief )
The client now knows that there is a "Problem that arose after I thought I had nailed down all
the pertinent details with the agency". At one time during one of our conversations the
client said something to the effect that "I don't want to know about anything that goes on
between you and the agency". Well, chum, welcome to the real world. You can't avoid
reality. And I don't think he/she was being malicious, it's more like a mystery to them
that they do not with to penetrate. That's fine with me.
I have my PC, I have my phone, and i know how to get a gig. Been doing it for 20 years now.
I guess what I might have to do is go W2 and forgo all that nonsense. That's not a big deal.
I am, however, very grateful for the existence of this board where information can be
exchanged so easily.
Now I am going to take the rest of the day off for a well-deserved break...
| OldGuy
Local user
(5/18/00 1:21:16 pm)
Reply | Edit | Del | "We will not pay you until the client pays us"
Always, always remove this clause from the contract. I can't think of any other business that would even consider doing business under these terms. The only thing that comes close is a lawyer who accepts cases under the proviso that he only gets paid if he wins the case.
You need to stop thinking like an individual and start thinking like a business. You should always ask yourself what other businesses would do if you tried to pull the same trick on them.
For example, go down to your local computer store, tell them that you want to buy a computer that you're going to resell to your client, but tell them you're only going to pay them when and if the client pays you. See what they say.
Or another example. Try buying an investment property with a mortgage and tell the bank that you're only going to pay the mortgage if you collect the rent from your tenants. See what they say.
Also you say:
>My contract has a mutual 30-day termination notice. I wonder if non-payment
>would be sufficient reason to allow me to break the contract. Maybe, maybe not???
If they don't pay you then stop work. It's that simple. I'm surprised that you would even consider continuing to work for someone who doesn't pay.
| Bob McIlree
Global user
(5/18/00 1:31:45 pm)
Reply | Edit | Del | Response to that question...
When pressed by a bork about P-W-P terms, I always responded:
"While I understand your position, it's unfortunate that my mortgage company, family doctor, Visa, and American Express won't wait until I'm paid to see their money. Therefore, I cannot wait until the client pays to see yours."
| Bitter Old Timer
Unregistered User
(5/18/00 1:48:22 pm)
Reply | Edit | Del | Re: "We will not pay you until the client pays us"
Bookstores, especially the big chains, typically do not pay magazine publishers until the magazines are sold. Of course this reflects in part the power relationship between the stores and the publishers.
For an individual to take this risk with their only source of income is too much. You might get to sit for 30 to 90 days without getting paid if the client is a slow pay company. This is too much to ask for the markup most borks charge.
| Pepin
Unregistered User
(5/18/00 10:19:38 pm)
Reply | Edit | Del | Follow up
The hiring manager is supremely pissed at the agent. I told him the full story. I am the
first person this agency ever gets to place in there. He told me if they fail to deliver ( me )
as promised, he will tell then they will never ever do business with them again. The fact
that the client is one of the World's largest finacial institutions just may have some clout.
Even if i get in there and I get what I want, I do NOT trust the agency. I will keep looking
to find out exactly where i belong ratewise, and if within a couple of three months I
discover that they are drastically underpaying me ( by finding a much higher paying job ),
I will most likely quit ( after giving the client their 30 days, and letting them know what
is going on )...
| Pepin
Unregistered User
(5/18/00 10:21:25 pm)
Reply | Edit | Del | Thanks, Old Guy
Sometimes a good whack on the side of the head is in order. I get you...
| RMP
Local user
(5/19/00 5:46:43 pm)
Reply | Edit | Del | Re: but see RMP's reply
In any reasonable world, a clause in the contract between you and the party that's paying you, to the effect that the contract is NOT an employer-employee relationship should completely settle the matter, and the buyer ought to be held harmless against reclassification by that one provision.
Yes, but this is not a reasonable world; the IRS's material on 530/1706 starts right off saying they don't give $#|+ about what the relationship is called in the contract or elsewhere, only what it really is. Although one of the 20 questions or something does state or imply that using a written contract is a plus on the IC side, so if you don't, or your contract doesn't firmly proclaim your IC status, it counts against you; while if you do and it does, you don't get much credit for it. Figures.
Robert M. Pritchett,
President - RMP
Consulting Partners LLC
People -
Openings -
Benefits -
Fees -
Acid Test -
Umbrellas -
Per Diems -
Y2K -
IRS
| RMP
Local user
(5/19/00 5:55:57 pm)
Reply | Edit | Del | Re: Follow up
Excellent! Now the client's justifiably pi$$ed at the broker. This gives you leverage with which to later on get the client to let you switch to another broker or an umbrella or go direct, if the broker keeps screwing you (and the client) around. You might even be able to ask around and start pricing these alternatives just in case, and then based on this info, if the broker's still being a pain, offer to pay them some minimal commission rate or release fee in appreciation for them finding you the gig and releasing you to work thru someone else or directly. If worse comes to worse and the client's behind you, you may be able to do this at no cost at all, just based on the client's clout with the broker, but since the broker did do something useful for you, I'd reserve this extreme measure for cases of the most extreme abuse/fraud by the broker.
Robert M. Pritchett,
President - RMP
Consulting Partners LLC
People -
Openings -
Benefits -
Fees -
Acid Test -
Umbrellas -
Per Diems -
Y2K -
IRS
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