The 24-year-old Republic of Ireland international was left out of the starting line-up for the second straight game in Saturday's 3-0 defeat at home to relegation rivals Wigan.
"The contract does not come into it at all," McDermott told Reading FC Player.
"Obviously I'm frustrated with the contract situation, it's a good offer, he's got to make his mind up.
"He says he wants to stay and play for me, he has to make his own mind up on that."
McDermott claimed he had dropped Pearce because of his performance in a 2-1 defeat to Stoke a fortnight ago.