Gross! Or... net?

July 11, 2019 5:27 AM

Person A "Anne" asks Person B "Bryan" to fill in for her during a day at work, a day when she has a professional conflict and has to be out of town. He is in the same profession but they have met only once or twice, have different job titles and different permanent employers.

When Anne asks Bryan to fill in for her, she offers "I will of course give you my wages for that day," and he implicitly agrees to this, without either person being more specific about it at the time. Assume, though, that this is not the kind of thing where a colleague is just stepping in "for the team." She will probably never fill in for him in the future. Anne wants to, and has offered to, give him what she would have made that day. It's all unofficial, she'll just pay him personally.
It is a temporary employer for Anne; Bryan works permanently for another division of this employer.

She is not getting benefits or insurance or anything taken out for herself, just paying taxes. (Don't know if SS is taken out? It is an 8 week position?)

Should Anne pay Bryan by calculating the daily rate of the salary that was quoted to her for her term at this job? Or should she pay him what she would actually take home for a day at this job?
If it makes a difference I'll be more specific: Anne is grateful that he stepped in because the nature of this job is a temporary intensive teaching position and it was better for her students to have the continuity. There is no consideration for anything on any professional level here other than what is fair for Anne to pay Bryan.

posted by nantucket to Work & Money (11 answers total)

Is Anne getting the paycheck for that day sent to her in her name? In other words, the taxes and deductions are all coming out of HER paycheck? In that case, of course she should only pay Brian her net pay, not the gross for that day.

If they are arranging for Brian to get his own paycheck in his name for that day, then he should be paid the gross and he should take care of his own withholdings etc.
posted by MiraK at 5:31 AM on July 11, 2019 [6 favorites]

Response by poster: Yes the taxes are coming out of her paycheck. She is paying Bryan personally in a private arrangement. The employer is not paying Bryan.
posted by nantucket at 5:35 AM on July 11, 2019

I am not sure about the attending legalities, however. At what point will Anne be considered to be subcontracting to Brian, if this is the case? And thus report to the IRS what she is paying him, register as the person who is subcontracting her work out to him, etc?

And is it legal for Anne to do this? Are her employers aware of this arrangement or are these two hoping to sneak one past??
posted by MiraK at 5:36 AM on July 11, 2019 [3 favorites]

Yes Anne should pay Brian the take home amount not the gross as it is informal, personal, and possibly below the threshold for reporting anyway.
posted by chasles at 5:39 AM on July 11, 2019 [6 favorites]

If this is an informal, off the books arrangement then she should pay him the net.

If he is doing more than $500 of work (I believe that's still the correct amount), then in the US she treat him as a subcontractor. That means having him fill out a W9, and giving him a 1099 at the end of the year showing how much she paid him. In that case she should give him the gross amount, and she could deduct it from her wages when she files her taxes. Of course, most people wouldn't do this, even if the amount is somewhat over $500.
posted by Winnie the Proust at 5:44 AM on July 11, 2019

Anne should pay Bryan the take-home, after-tax amount. In the future Anne should consider a different arrangement, like maybe getting Bryan a nice thank you gift or something. Perhaps it’s just the way the question is phrased but I agree that it makes me wonder whether their employers are cool with the arrangement.
posted by sallybrown at 7:17 AM on July 11, 2019

Response by poster: Thanks everyone. I am the Anne character and just wanted to be sure I was being fair to "Bryan." (The employers don't care what I do with my $ ; we are educators our day's salary is a pittance. )
posted by nantucket at 7:37 AM on July 11, 2019 [2 favorites]

After-tax take home pro-rata equivalent. To be honest though, I think it would "feel" much better if you were to give Bryan a gift, like a similar-sized voucher at some frequently-used establishment.
posted by moiraine at 9:24 AM on July 11, 2019 [1 favorite]

If Bob is just doing some different work for his regular employer than he normally does, so he's getting paid the same either way, and the employer is ok with this, I don't think you really owe him anything. From what you described it's not like he'd be losing out on his regular pay for doing this favor for you. But if you want to give him something, whatever amount you feel comfortable with should be fine.
posted by bleep at 11:04 AM on July 11, 2019 [1 favorite]

Is Bryan salaried in this scenario? And not taking a vacation day or anything like that? I understand Anne wants to stick to what she offered, but this seems to be to be a professional favor where it's more about paying it forward than paying it back (if Anne won't ever be able to return the favor). It would seem really weird for me for Anne to pay Bryan for this if he's salaried because then he's getting paid twice. A gift certificate to the local coffee shop or six-pack of beer seems like the better option than paying cash.

Having said that, given that Anne offered money, then net is absolutely fair. (If Bryan is a stand-up guy and not super broke, he might very well find this uncomfortable and not accept payment.)
posted by bluedaisy at 12:49 PM on July 11, 2019 [1 favorite]

I would pay Bryan my gross pay for the time (day) he works, not the net.

I have no idea what his tax situation is. He can pay them (or not). He is working at the gross pay rate you agreed with with the employer.

Why should he suffer from or benefit from your tax rate?

This will cost you the amount of taxes taken out. It should cost you or maybe your employer that. Presumably, Bryan will pay taxes on his gross for the day.

I know you are doing this to help the students. I commend you for it. However, you are the one who is paying for the substitute and should pay him the same wage as you would be earning. Taxes are each other's business.

Having said that, why don't you just talk to him about it and mutually agree to an amount.
posted by AugustWest at 9:35 AM on July 12, 2019