Contractor Life At a Startup – Overworked and Underpaid

We all get excited when we see this great new technology that gets us going. It’s innovative, yet classic, and we want to be apart of everything they are doing! Oh, it’s a startup? Well, we believe in the growth of this technology and we can work hard at the front door of things as a contractor and be compensated for our hard work later. We just have to stick it out until this company grows and bam! Six figure income, right?

Wrong. That’s not quite how it goes. For some startups, it does go that way but for some others, you can do a quick search on Quora and find a few horror stories of that tenacity as a contractor being rewarded with more work and no hope of negotiating rates. That is not to say that startups are dishonest or selling dreams but more so that a startup is in it for its growth, not necessarily yours. You have to sit down and figure out just how much work you will do for the pay given.

Domestic vs. International Pay Rates for a Contractor

As a contractor, your rate is typically your own and based around the market for the talent you have to offer. One thing you must research about a startup before you sign on the dotted line is how they are deciding the rate. Some startups base a US rate of pay on what they may be paying someone else internationally. Depending on the region, such as Asia or Africa, that rate could be substantially lower and the startup may view that as even pay. It’s not. That’s not to say US people should be paid more but that certain industries have a standard that even startups should adhere to in the countries they operate.

Are you comfortable with that rate of pay basis long term? If you cannot see that long term, don’t waste yours or the startup’s time because you know there will come a point where you will be unhappy no matter how much you believe in the work being done. You still have to eat and pay bills and as a contractor, you would need to take on additional contracts to make the difference.

Out of Scope Work for Contractors

This is a big no no for startups but again, contractors are abused often with this notion: We are changing your responsibilities and redefining the scope of your work. What makes this an issue off top is that this is an immediate breach of the contract considering your contract should detail your exact responsibilities. A startup wouldn’t contract Verizon to do work and then change the contract without signing a new one but this is OFTEN done to your freelancer/contractor. As a contractor, you have to protect yourself in that, if the scope changes, so should your contract, including the scope and probably the compensation.

Startups don’t want to deal with that but at the same time, they should be cognizant that contractors are people, too, not workhorses. By labor standards, if they would like the freedom to change the scope of work on the fly, you must be hired as an employee, which means you are due certain benefits and minimum compensation standards. Again, this is not to say all startups operate this way but a lot do and it’s creating an apprehension to the startup market that eliminates quality people for other startups due to an experience with one.

What Startups Can Do for Contractors

We know startups don’t always have the funding. Bootstrapping is becoming far more popular with businesses and that puts a strain on resources but ask yourself one question, CEO: Would you do this amount of work for this amount of pay with no clearly defined opportunities for the future for someone else’s company? Be truthful about that answer and don’t think about where you are as your own company. Put yourself in the shoes of those that work for you as contractors and try to understand that while that contractor has great desire to work with you, they still have a life and family to be accountable to.

Leave a Reply