Pearce's contract runs out at the end of the season and the Reading defender has yet to agree to a new offer from the club.
McDermott left the 24-year-old out of the starting line-up for the second straight game in Saturday's 3-0 defeat at home to relegation rivals Wigan.
But the Royals manager insists the decision was down to Pearce's poor display against Stoke, from which point he has lost his place to Sean Morrison.
"The contract does not come into it at all," McDermott said. "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.
"I thought Morrison was excellent against United and it was just a personnel decision," McDermott said. "You live and die by that.
"I spoke to Pearcey on Friday. I said to him he needs to do better. He had to do better picking up Robert Huth for the set play and then when (Cameron) Jerome turned him for the second goal. He accepted that."
McDermott also revealed midfielder Danny Guthrie, who was overlooked at the weekend, was a doubt for this Saturday's trip to Everton after picking up a calf injury.
He said: "He wasn't selected for the squad (at the weekend). He (also) didn't train this morning with a slight calf problem."