Editors note: The following post should NOT be taken as legal advice at all. If you’re looking for legal advice, you will need to hire a licensed attorney.
Startups (and many other businesses starting out) tend to hire contract employees to help grow their brand. They do this to protect themselves from heavy liabilities so that at any moment if something goes wrong, they can terminate your contract; with no health care or benefits provided, it’s the cheapest alternative to an employee. It’s nothing new, but there’s nothing wrong with this practice either as hiring an employee can be a burden that many smaller companies can’t handle or afford.
So, as an expendable contract employee, how does one protect themselves? As a contract employee myself, here are three ways to protect yourself if anything goes awry with your company’s working relationship.
1. Be Very Detailed when Negotiating and Writing The Contract
Contracts are no joke. Yes, you and the startup’s CEO may get along just fine. However, it’s a business transaction so you need to sidestep any personal feelings you have for each other. The idea is to make sure you get a fair salary, fair working conditions, and you nail down when you get paid before moving forward. Don’t be selfish, but don’t let the company walk all over you.
If you can, especially if it’s a long-term agreement, get a lawyer. I can tell you firsthand that if I didn’t have a lawyer, things would’ve been be a little rough for me.
2. Don’t Hesitate To Ask for A Copy of the Contract
I’ve made this mistake multiple times before- I’ve been hesitant to ask for a copy of the contract. You’ll want a copy just in case they lose your contract on their end. You also don’t want to worry about not getting paid when technically it’s not written anywhere that you should. I don’t care what relationship you may have with the company- always ask for a copy of the contract.
You have to remember that at any moment there could be something that triggers a motive in their mind that decides you’re messing up and your contract can be terminated. Having a copy is also great if you decide to leave as well.
3. Have a Sunset Clause
What is a Sunset Clause? A Sunset Clause is where you have an agreement with the company on a set monetary price you are owed once the contract is terminated or completed. The reason why this is fair is because the work you do for the company, especially if it’s starting out, won’t necessarily show its affects until after a few months, possibly once you’re gone. Imagine you build a product or a system that later generates the company millions of dollars in the upcoming months. You want to make sure you secure yourself and they’re obligated to pay you.
Mentioning a sunset clause can be tricky, but I would only mention it if it’s a long-term contract and you’re assigned things that have a BIG affect on the company’s growth. Of course, it’s not wise to ask for a Sunset Clause if you’re given equity of any part of the company; that’s just rude.
You may think this is a very selfish and greedy article, but you have to understand that it’s very risky to put yourself in the position of a contract employee. Anything can happen and the company won’t be there to back you up or keep you for the longterm. So make sure you protect yourself because at the end of the day, you still need to be able to pay your rent and survive.
If you have any more questions, just ask them below and I’ll answer them promptly. Thanks for reading!