How much should I get paid now that I am going part-time?

June 26, 2009 1:36 PM

Please help me figure out how much I should get paid now that I am going from full-time to part-time.

I am currently working full-time and am a salaried employee with benefits. I had planned to leave the position at the end of July, but the company would like me to stay on and has asked me to go to part-time instead. I like the company, I like my co-workers and my department has other happy part-time employees, so this model apparently works.

Before I enter into negotiations with HR (no official package from them yet), I want to get a feel for what would be a reasonable hourly rate for me. I make $75K / yr now and work about 60 hours a week. I will scale down to 15-20 hours a week, and I will perform the same functions (so if my job was to make 9 widgets a week before, now I would make 2-3 widgets a week). I will have the same manager, we have a good relationship and she is supportive of me going part-time. I will most likely be paid hourly, but will remain an employee (i.e. I will not be a contractor). This is in California.

How should I calculate my hourly rate? Can I ask for any benefits? Anything else I should watch out for?

Other extra info: I am happy about going part-time and feel there will be other benefits to staying with the company outside of making money. I genuinely like the work and the people, not to mention what I am doing next is rather isolating, so I welcome the opportunity to stay involved with the organization.

posted by anonymous to work & money (9 answers total)

Generally, and this may vary depending on location, less than 20 hours/week does not qualify for benefits. I would figure a wage that will let you afford health insurance.
posted by JJ86 at 1:48 PM on June 26, 2009

First of all, I wouldn't get too confident in the idea that they will actually only ask you to do 15-20 hours of work. It's hard scaling so far down from 60 and in practice you might see it creep up to 30-ish. Not that they have any right to do this, just be prepared to deal with it, as it happens a lot to (more than) full-time professionals who attempt to pull off a half time schedule.

Secondly, while 20 hours a week may not qualify you for mandatory benefits under various laws or union contracts (about which I express no opinion) you can certainly bargain for these things in your compensation package. I mean, nothing prevents a company from giving benefits to a 20-hour employee whether or not they have to. Contra to JJ86's recommendation, I might go the other way and make benefits a priority, letting the salary slip a little correspondingly. Depends on your priorities at this time in your life, of course.
posted by rkent at 1:58 PM on June 26, 2009

To calculate your hourly rate in general, you divide your annual salary by 2080 (40hrs*52 weeks. Some people use 2088, but it seems that's really for leap years). At your salary, for a typical work week (40 hours), you make about $36 per hour. I don't know if the 60 hour week is constant and/or the expected work week when you were given that job at that salary, so if you want to go by a 60 hour work week (3120 hours), you make $24 per hour. So, based on what you're making now, the hourly rate should be in the $24-$36 range. Some factors, besides market rate, to consider that might help you to figure out where in the range, or outside of the range, you want to fall:

Taxes:
-Will you still be a full employee, or will you be considered a freelancer/contractor and given a 1099? If so, you have to take into consideration that you'll be taxed higher and they'll be saving in employment taxes, so asking for the higher end of the range, or above if you're comfortable and feel the rate is competitive, is completely reasonable and appropriate.

Benefits:
-If your insurance is through them and not through a spouse/partner, your options are: COBRA, which is expensive; private health insurance, which is expensive and has other built-in complications; ask them to remain on their insurance, either the way the benefit is set up now or just the ability to continue in their plan and pay the full amount (which will be equal to cobra, but without the time limit, usually 18 months or so). If your choice is COBRA, private insurance or remaining in the plan, paying the full amount, it is reasonable to ask for an hourly amount at the higher end of the spectrum. Keeping your health benefit as it is would be awesome, and a reason to go with the lower end.

-Vacation time. Will you still be eligible for vacation and sick time? Obviously, it wouldn't accrue at the same rate. If so? Lower. If not? Higher.

-I'm not sure what sort of 401k or profit sharing program your employer has, so you'll have to figure out your priorities when it comes to that.

If it were me, I'd ask about benefits and have a hourly rate in mind for PT+benefits and another for PT-benefits.

When you decide on an hourly rate, check it against the market rate (similar gigs on craigslist or similar contractors advertised on craigslist, salary.com, etc.).

One last thing, make sure that you are released from any non-compete, or work out some arrangement, if you'd like to do additional freelance work in your industry.
posted by necessitas at 2:09 PM on June 26, 2009

When our exempt salaried employees drop from full time to part time they typically retain their hourly rate. If you're exempt (not OT eligible) you should divide your annual salary by 2,080 to calculate your hourly rate. You're paid on a 40 hour per week basis, even if you're putting in 60 hours.
posted by contrariwise at 2:13 PM on June 26, 2009

Note, I disagree with the 2080 hours of work when consulting for a year this doesn't include paid time off which needs to be accounted for,

1960 or even 1900 is a much more realistic number. You're also on your own for benefits. If I was trying to make 75,000 an hourly wage I'd set my base salary at about 15% higher then already being paid and divide by 1900.

So 75,000 * 1.15 =~ 86,000/1900 =~ $45

This isn't, by far, an outrageous contracting rate and they want you.
posted by bitdamaged at 2:24 PM on June 26, 2009

Generally to go contract (IE, you pay all your taxes) you would want about twice what you are making as a full time employee. This entails no benefits whatsoever, no health insurance, no paxes paid on your behalf, and is totally standard as far as asking 2x as much hourly. Unless 75k is including overtime, do the math based on 40 hours. If they are paying your taxes, I'd do a straight 75k/2080 and just eat the cost of health insurance, personally. It is part of the downside of working part time, but with the other downside (doing your own taxes) taken care of.

Of course shop around for insurance first, this may or may not be a huge expense in your area or for your needs.
posted by shownomercy at 2:26 PM on June 26, 2009

OP has said s/he will remain an employee and not become a contractor. Our part time employees working less than 30 hours per week don't receive any paid time off.
posted by contrariwise at 2:32 PM on June 26, 2009

Whether or not you will be still be eligible for benefits doesn't depend at all on your location. It depends on your employer's contract with your various benefit carriers. A typical contract will stipulate that, in order to be eligible for coverage, an employee must be full-time. A typical contract defines full-time as working between 30-32 hours or more per week. You can't "negotiate" to keep your benefits unless your company is willing to amend their entire contract. Not that it's impossible - maybe you work for a very small company and maybe you're a valuable employee, so they'd be willing to do this for you. Otherwise, it's probably off the table.
posted by pecanpies at 9:00 PM on June 26, 2009

Do you have to go to an hourly wage? I work part time at a UK company and have a pro-rata salaried job, which means I'm a salaried employee like everyone else, I just get paid 20% less for working 20% fewer hours. My holidays work the same - I get 20% knocked off my entitlement. Apart from that I have all the same benefits. I'm sure the UK and california are different, but it might be worth looking into.
posted by ukdanae at 2:49 AM on June 27, 2009