Employee vs. Independant Contractor

[PSwan]

I am an engineer who works as an independent contractor and I have a client who wants to take me on as a part time employee. He says that he will be able to pick up certain contracts if he can show that he has a PE on staff. The plan is that he would pay me some meager salary for the employment while I continue to serve him independently on a per contract basis through my business.

Any experience with such arrangements?
Any foreseeable pitfalls?
I am in the process of consulting my insurance broker and tax preparer for what they think about it.

Thanks!

 

[Ron]

Are you going to qualify his business as an engineering business? If the business offers engineering services, it must carry a "Certificate of Authorization" in most states (including California). To do so, typically requires that the qualifying engineer be an officer of the corporation. Check into this before you agree to anything.

 

[desnov74]

If he is paying you as an employee, then insurance should be his problem in my opinion. Mabey if its your costs then you should ask for conditional ownership plus a percentage of the gross. Mabey 3-5% or something. If he gets his PE or wants someone else he can conditionally, get rid of you. Then the firm can be an engineering firm by "Certificate of Authorization"

 

[ajack1]

We did something similar but not the same. We had a company that paid us a retainer every month and for that got so many hours a year for a 12 month contract.

Our accountant and business adviser both liked this idea as basically you were paid up front and it helped keep a constant cash flow. In reality it did not work very well as our industry tends to be feast and famine and the work always came along when we could have taken other more lucrative work on and we still had very little in the slow times.

As I said not exactly the same but worth considering, if you are able to charge a premium during busy times.

 

[seymours2571]

Ron has it right.

At minimum you would need to be a full time employee. Also, your client would then need to obtain professional liability insurance (E&O) for his company in order to promote engineering services.

Here is the verbage from my states statutes:

"Engineering Firms – An Oklahoma licensed PE may or may not be physically located at each
office, but an Oklahoma licensed PE must be a full-time employee of the firm and listed as
being in responsible charge of each principal or branch office from which engineering services
are being offered and/or performed. Also, the responsible charge PE must list the physical
location of the office in which they are a full-time employee for the firm."

Hope this helps.

Steve

 

[Lion06]

So he wants to give you some meager salary to be "on staff" and continue the contractor relationship? If you're doing well right now, this seems like a win for him, and not much of a difference for you.

Why is he only willing to give you a "meager salary" for bringing in new contracts to his company via your PE license? That doesn't sound right to me.

 

[frv]

StrEIT makes a good point.. I don't see much benefit to you.

 

[brandoncdg]

Sounds like he is making you a partner without any of the benefits of being a partner.

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Los Angeles Civil Engineering specializing in Hillside Grading

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