going from salary to hourly without benefits... should i ask employer for a higher wage?

July 13, 2009 12:38 PM

going from salary to hourly without benefits... do I have a choice? should i ask for a higher wage?my firm is really slow, so my employers are changing me from salary to hourly... basically, as work comes in, i will get paid for the hours i bill. they are also eliminating my benefits package (heath/dental/vision/401k). i am not sure what my workload will be like, but i was typically working 40 hours/week and might be working less than 20. (i plan to compensate with unemployment if i have to.)

i have spoken with people outside my field (architecture) and they say it is typical in this situation to get an increase in your hourly wage around 10-15% to compensate for the decrease in hours as well as the loss of benefits. i am looking into other job opportunities, but most firms are in the same boat and hoping to keep the employees they have…

has anyone had a similar experience? if a company is eliminating a lot of their overhead in this manner, is it ok to ask for an increase in this case? i know i don't really have any leverage, except for a good review record and +3.5 years experience with the company. any thoughts?

thanks!

posted by dityfleur to work & money (9 comments total)

what state are you in?
posted by lia at 12:56 PM on July 13

i was typically working 40 hours/week and might be working less than 20. (i plan to compensate with unemployment if i have to.)

Sorry, not possible. Collecting unemployment while receiving any income of any kind is something they don't look too fondly on. If you get caught you'll have to pay it all back with interest and possibly a fine. I think in some states you can go to jail for it too.

(I was on unemployment for 2 months during 2008 in MN.)
posted by airways at 1:02 PM on July 13

washington... i believe you can collect unemployment if you are under a certain amount of hours per week.
posted by dityfleur at 1:04 PM on July 13

Also good luck man. It sucks. Wasn't fun when I went through it - I actually had a similar situation where I could work maybe 10 hours a week or so, wasn't worth it, I took the UI instead as it was higher than the 10 hours would have given me.
posted by airways at 1:04 PM on July 13

washington... i believe you can collect unemployment if you are under a certain amount of hours per week.

That may be I suppose. Be careful though, obviously. MN's UI website was very clear on the rules, hopefully WA's is as straightforward.
posted by airways at 1:05 PM on July 13

One thing you might check, with such a drastic change as that, is if they are required to provide you the option of a severance package rather than the decrease in hours/benefits.
posted by anastasiav at 1:08 PM on July 13

fyi: from the washington state employment security department...

Q. Can I collect unemployment benefits if I work part-time?


A. If you work part-time, we reduce your benefits using the earnings deduction chart (gross earnings minus $5 times 75 percent).

You must still meet the job-search requirements while working part-time.

If you did not work more than 17 hours in any week in your base period, you may need to look for only part-time work.

Working part-time usually extends the number of weeks you can draw benefits. Additional earnings also may help you qualify for a new claim when your benefit year ends.
posted by dityfleur at 1:15 PM on July 13

First, see how much of a weekly benefit you would be eligible for under the Washington system. That'll tell you something about how to approach this arrangement.

If this were me, I would be concerned about whether or not I'd be eligible for COBRA coverage to cover your health insurance. I would consider whether it might make more sense to go into a freelance mode. However, in order to be eligible for unemployment they need to lay you off. The question then is whether they're allowed to lay you off and then hire you back as a freelancer. The state may frown on that. Basically, you'd claim unemployment for the weeks your wages are low or nonexistent and then not claim when you have income coming in, either from your current firm, another firm or other work you can drum up on your own.

These things have tax implications so you should talk to an accountant or someone in your field who does similar work.

You should probably also call the unemployment office and explain your situation. Don't talk too much, let them do the talking. Say that they've told you that they could guarantee 20 hours per week but without benefits and that you'd like to do that work for them but you're worried about how that might affect your Unemployment Insurance and if they can offer any guidance as to what would be the best thing to do.

But, keep in mind that they can't just keep you on call. I mean, they can if you let them, I guess. But I'm going to suppose that losing your health benefits plus over half your pay is going to severely impact your life. I think you need to do more talking with your company about just exactly what the plan is here. Because either they haven't fully outlined what their plan is or you may not be understanding it correctly. The most humane thing for them to do would probably be to offer a severance, lay everyone off and then renegotiate a freelance rate with each individual.
posted by amanda at 1:26 PM on July 13

it is a small company, so they are generally not required to do anything (i.e. severance).

is it typical to renegotiate an hourly rate in this situation? i am going to be responsible for my healthcare coverage (can continue on my existing plan for 6 months at $350/month).

thanks.
posted by dityfleur at 2:15 PM on July 13