EOR laid off, Asked to go hourly as a vendor 5

[Ebowski88]

I was a VP over the mechanical project development and engineering department which my company decided to dissolve and lay off most of the engineering staff due to financial difficulties with some of the projects. They asked me to stay on and bill the company hourly.

I am unsure of the entire scope they want me to complete, however I was the EOR on some of the projects that involves design of boiler, refrigeration and HVAC systems.

I am seeking advice as I don’t have anything in place such as an LLC, or an E&O policy to preform services. This company also has a habit of entering into contracts that lack much definition, and I’m wondering if I need some type of contract. The only formal thing I have now is that I am laid off and have a month’s severance pay but my boss is asking me to continue to work end submit invoices. I am also concerned if something went wrong with some of my services the company could claim I was responsible for their damages. Would it be better for me to walk away from this arrangement? What are the risks?

 

[JedClampett]

This is a good question and you definitely need the services of a lawyer. If you're an hourly employee, are you a contractor? What protections do you have? Or are you a part time employee, covered by whatever E & O coverage the company has? These are things you don't want to find out after you get served a subpoena.
I'd think an employment contract is in order, due to the circumstances. This can delineate your liability (hopefully zero) and coverage under their policies. It might also make them think about a "rent an engineer" policy.

 

[3DDave]

It seems like they are making bad decisions and looking out for themselves. That isn't a good sign.

Decide if you believe you can get a job elsewhere vs. tying up job search time working for them and the related risk.

I agree on consulting with a lawyer. It doesn't sound as if the company has done their due diligence before making this offer or, possibly, they have and failing to mention the risk to you and risk avoidance measures you should take is planned.

 

[IRstuff]

The most important thing is your insurance coverage, for past work, current work, and tail.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

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[dik]

How long did you work for them to warrant 1 month of severance? Can they guarantee you any amount of work? 20 hours per week? Your hourly rate should be in excess of 2x your earlier hourly rate. You also need insurance, a contract and a lawyer, IMHO. Can you work from home?

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik

 

[Ebowski88]

Thank you for the advice I have reached out to a local attorney.

Yes I think there is risk they are not aware of. A lot of these projects had losses due to scope gaps or issues not defined in lump sum contracts with clients.

All of these projects are design-build and I would be in a position where my review of subcontractor and supplier bids/submittals would carry risk. If I missed a key detail it could cost the company money for example to correct an issue in the field, which they would have to hold me responsible for. I don’t see a way I can do it without some sort of protection against that.

 

[Ebowski88]

It was a little over 3 years. They gave the same package to my department. My former boss said 40 hours/wk plus they would still pay me the severance on top of billing a rate that is about 30% higher which gives me all in about the 2x rate at least for the first month. They also offered to keep the rent up on our small office for the time being. My boss says he’s working on some things for me to transition into, if we land some contracts he is working on.

 

[dik]

Your call, but the rate should be higher and you should strive to work from home... solves the issue of office rent. What is your level of experience? Do you have a good background in Specifications, Project Management and Contract Law?

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik

 

[Ebowski88]

Your call, but the rate should be higher and you should strive to work from home... solves the issue of office rent. What is your level of experience? Do you have a good background in Specifications, Project Management and Contract Law?

I understand the design build process and I can hold my own but I have a hard time seeing how I can be in a position to make decisions for the company without some sort of contract to define my scope.

 

[dik]

See what your lawyer has to say about having a contract...

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik

 

[CWB1]

I would be certain that you’re understanding the scope of your contract with them. They’re obviously looking to save money by laying you off, and they can’t do that (or even hire you at the same cost) as a contractor full time with the same take-home and benefits. Unless you’re willing to significantly compromise or have other customers then this proposal prob doesn’t make sense.

Given that they only gave a month’s severance suggests that 1. you’ve only been there a few months or 2. they’re a pretty lousy company. In either case I would doubt the likelihood that they renew contracts beyond the initial or give you work beyond the contracted minimums - plenty of reason IMHO not to open a business on their account.

 

[dik]

That's why I asked how long he had been there... a month's severance for over 3 years is a little light up here... I should have asked, "What is the likelihood of other work?" I assume any overtime is chargeable, either at unity or with a factor.

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik

 

[IRstuff]

They’re obviously looking to save money by laying you off, and they can’t do that (or even hire you at the same cost) as a contractor full time with the same take-home and benefits.

That's not always the case, though; I've been at companies whether the contract multiplier was something like 3.5x, while the salary/bennies was only about 2x. So, it's hypothetically possible that their contract billing rate for a subcontractor might only be 2.5x to 3x, which might still give them some cost margin on a fixed-price contract that they're starting to overrun. They could skinny the overhead multiplier to a contractor quite a bit, even if they were still giving you the equivalent of your original salary and benefits, particularly if you are highly compensated. I suspect that my company could bill me out at 2.25x vs. 3.5x, if I were subcontracted instead of employee.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

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[dik]

The last company I worked for, my rate was a tad over 3... but an engineer I knew that worked there (she wasn't registered at the time) did great structural work and drafting was billed out a slighty less than $100/hr... I found out later that she was paid as some kind of technician at $15/hr. I didn't know that but it was reprehensible... she recently died and didn't want the company to know... she was that upset with them.

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik

 

[Ebowski88]

I found out later that she was paid as some kind

of technician at $15/hr.

That is awful…

 

[MedicineEng]

It smells fishy.
I think that they just want to keep you to tie some last knots and will ditch you at first opportunity.
I would look elsewhere or try to negotiate a fairly high rate

 

[dik]

The structural department manager was one of the top half a dozen engineers I've worked with... and when I found out, he dropped right of the list. He had to have known. I haven't talked to him since.

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik

 

[Ron]

@ebowski....are you the qualifier for the engineering license for the business? If you are the engineer listed with the state board for the company then typically you must be an employee of the company and often required to be an officer of the company. Check with your state board for those requirements. Their Certificate of Authorization might be jeopardized.

 

[Ebowski88]

Yes, and they would probably have to fix that in one instance. They have some other PEs on staff that could fix that.

Although that design is already completed and they could just outsource any further design work. I’m guessing since they are getting away from this type of business it won’t be an issue for them. At least one of the states they want me to continue to work in does not require a COA.

We worked out a deal for me to complete the services through another engineer’s small company who is putting me on their payroll to avoid the need for me to go to the trouble and expense of getting insurance, etc set up. Seemed like a decent solution for everyone since the rate is good and we can build some other new business while this closes down.

 

[dik]

Just be cautious...

Rather than think climate change and the corona virus as science, think of it as the wrath of God. Feel any better?

-Dik