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Throw a big fat watermark on everything.
You have 3 options: 1) Just do it. 2) Inform them of your hourly freelance rate and ask them how many hours they want you to put towards this. 3) Tell them your lawyer has advised you that working on actual client materials puts you (and the agency) in danger of a lawsuit from the client for divulging trade secret materials, and even if you sign an NDA it would not be valid because there is no consideration (payment for your services), and thus no contract. You could also add that there may be state laws that ban posting an employment opportunity and then asking responders to work for free as the price of employment; that's called bait-and-switch fraud, and you're sure a company as respected as theirs would not do something like that, right?
Charge them a freelance rate.
Standard practice but a trash one. It provides them with free work and doesn’t show how you use the resources and other people on the team to solve a problem through design. They usually provide vague briefs and even more vague information.
Fingers crossed for you that they are actually looking to hire you, but that sounds like they’re using the interview process for free consulting not filling a role.
Red flag!
I had a recruiter give me the same deal this week. They guaranteed that I'd be paid a day rate for my time.
I suggest that you request the same compensation.
I'm interviewing for a senior position at a design/ad agency — independent, in business for decades, multiple offices across the US. During my first phone interview, the HR contact did tell me that there would be an assignment and presentation portion. However, I just received the brief, and it's actual client work for their actual clients. They shared the broader scope of the brief with me, so I can clearly see that this portion that I've been assigned is the first step of the broader project. I'm already not a fan of having to do a project on top of my full-time job for an interview (though I do see the benefits for the hirer,) but I'm even less of a fan of doing free work that could potentially be used for no compensation. A couple of my friends say that I shouldn't do it. I don't desperately want/need this job, but I do like the opportunity so far.
Is this a red flag? Standard practice? I know that spec work for interviews is relatively standard, but for existing clients and upcoming projects? If it is, fine, it'll be a fun exercise I guess, no hard feelings. But I don't particularly want to be taken advantage of.