Is being paid for billable hours only a normal thing?
October 25, 2012 8:30 PM   Subscribe

How common is it for a full-time employee to be paid only for billable hours?

A couple of months ago, I accepted a full-time position as a graphic designer at a very small studio (there are three of us including the principal.) I was and still am thrilled to have the position, but...

When I was interviewed, I was informed that the position was hourly. I had no problem with that. I've never had a salaried job so accepting another hourly one was nothing new, as long as, I considered, it was full-time.

It turns out, though, that I'm only paid for billable time -- billing time to a client effectively counts as my timeclock. While it's possible for me to bill time to the studio for things like production meetings and filing, getting more than a handful of these hours a week is strongly discouraged.

This would be fine if I had a constant stream of work to do, but since I've been there it's been rare for me to get more than 7 hours a day, and some days have been as few as 5 hours. I'm still expected to be at the office from 8-5. Is this sort of arrangement common in design or other fields? Is it ethical?
posted by girih knot to Work & Money (31 answers total) 7 users marked this as a favorite
 
This is bullshit and you are getting screwed. Find another job.
posted by violetk at 8:36 PM on October 25, 2012 [43 favorites]


So, you say you're getting paid at the hourly rate for an employee? But only for those hours that are billed out to a client (presumably at a much higher rate)? It sounds like you're taking the risk of not having enough work, but somebody else is taking the premium for that risk. If I was your employment lawyer (which I'm not: IANAEL, IANYL, TINLA) I'd go back and take another look at your contract. However, you may not be able to do much about it; if you don't agree with the way your employer wants to do business, then you may be looking for another job. (OTOH, if the contract doesn't agree with the way your employer wants to do business, then you may have a winnable breach-of-contract case. Not as nice as a normal, regular job, but better than a sharp stick in the eye.)

TL;DR: read your contract, maybe lawyer up.
posted by spacewrench at 8:41 PM on October 25, 2012 [1 favorite]


Wait, sorry, you're required to be at the office for 40 a week, but they'll only pay you for the 'billable hours'?
posted by Think_Long at 8:41 PM on October 25, 2012


If they're paying you by the hour, they need to pay you when you are working, whether you can bill those hours or not. What they want you to do is pad the hours you're billing to the clients, which is unethical and illegal (and really common, unfortunately)
posted by empath at 8:43 PM on October 25, 2012 [16 favorites]


This is wrong. In this declining economy employers are finding any way possible to save money, usually on the backs of employees. If you're required to be at work, you should be getting paid. Start looking for another job.
posted by HuronBob at 8:43 PM on October 25, 2012 [2 favorites]


If they expect you to be at the office between certain hours, you should get paid for those hours. This is bullshit and you're being taken advantage of.
posted by lunasol at 8:44 PM on October 25, 2012 [6 favorites]


If you're expected to be at the office, they should be paying you for that time. You're not there for your own enjoyment, after all.

Check the details in the contract you signed. I wonder if you agreed to this, albeit unintentionally.

"Strongly discouraged", by the way, may be subtle intimidation to get you to bill them more favorably, but this is business and you're certainly entitled to bill for the time you spend doing work they've asked you to do.

You could fight them on this, or stop doing work that isn't billable, or go elsewhere when they have nothing for you to do.... but those don't solve your problem, which is needing to make sufficient income.

More importantly, though, these don't sound like the kind of people I would want to continue to work with. I'd be planning my next interview if I were you.
posted by nadise at 8:44 PM on October 25, 2012 [2 favorites]


From one perspective, this is the case in any profession that relies upon client billing. If there are no clients, there is no work, and your pay cannot persist indefinitely. The only real question is if they do this explicitly (as in the case of your employer) or implicitly (by simply laying you off).

Yes, previous commenters are correct in indicating this is not common, not ethical, and possibly illegal depending on your locale. That said, I'd meter any concern I have with whether you are getting paid enough not to care. I doubt that's the case, which would result in me promptly looking for new work. That said, if you are getting paid overly well for billable hours, it might make up for non-payment for non-billable hours.
posted by saeculorum at 8:46 PM on October 25, 2012 [1 favorite]


When I started out in a business where clients are billed by the hour, I got paid for every hour I was in the office. I got paid a higher rate for billable hours. Now I only get paid for billable hours, but I also work almost exclusively from home. The only time I would be in the office anyway would be because someone was getting billed for something I was doing there.

So yeah, you're getting screwed.
posted by wierdo at 8:52 PM on October 25, 2012


Best answer: A lot of small businesses are getting squeezed, so I have heard of this sort of thing happening more often.

My response to violetk's take is, whether or not to get a different job is probably mostly about (a) how badly you need one, (b) how likely this possibility is in your local conditions, and (c) the degree of loyalty you feel toward your current employer.

If (a) is very low, do whatever you feel good about.

If (c) is low and (a) is not, try (b) no matter how (un)likely.

If (c) is high, talk to your boss and make sure he or she knows how you feel. Don't let him or her get away without convincing you with actual data that these measures are necessary. And even if they are, make it clear that you require clear criteria of success for the company that would denote the lifting of these constraints. And figure out what you'd like as a tradeoff in the meantime, and negotiate for that as well.

Being flexible with your employer in this economy can pay off later, but it's a gamble, so you'd better have a good reason as well as a good read on your employer's character & integrity.
posted by perspicio at 8:54 PM on October 25, 2012


I don't think this is common. I think you are getting screwed.

I would fully bill my admin work time to the studio. That's likely why you have that option. Don't let their discouragement convince you to write it off -- if you don't want to be getting screwed over. If you really really really need this job, etc., you have to consider those factors, natch.
posted by J. Wilson at 8:59 PM on October 25, 2012 [1 favorite]


It's not legal in the US, anyway, but I'd in practical terms be weighing how much they're restricting what you do the rest of the time, and how much you're getting paid, and how much you like the job otherwise. I've had jobs where I technically did this (although it wasn't strictly mandatory) but as there was no functional difference between "sit at the office doing my homework and waiting to see if I get work" and "going home and doing my homework and having possibly more work to do tomorrow", I felt like the former made more sense. For good hourly rates in a job I liked if they were cool with my hanging around watching Netflix with headphones on, I'd probably not make overly much fuss.

I mean, basically, if you work out the amount you make over the actual hours you work, regardless of how you actually accrue it, would you take this job at that amount of money? If so, don't worry about how they calculate it. If not, then yeah, you're getting screwed, deal with it accordingly.
posted by gracedissolved at 9:02 PM on October 25, 2012


Whether the current scheme is legal or not (and I suspect it is not), the employer can set a lower hourly rate if compelled to pay you for 8 - 5.

But I don't see a good reason for why they would expect you to be in the office for hours they're not paying you for. If it were me, and I had six hours of work, I would say at the end of those six hours "whelp, I'm going home, see you tomorrow."
posted by zippy at 9:13 PM on October 25, 2012


Response by poster: To clarify -- there is no problem with me billing admin/office work to the studio if it needs to be done. The discouragement is in finding a lot of chores that don't really need to be done to fill time, so I don't charge for time that I can't account for.

If I'm doing work, I'm getting paid for it -- the problem has been days where I've had to sit around for 2+ hours hoping work will come in so I can get paid for being there.
posted by girih knot at 9:14 PM on October 25, 2012


To figure out if you're being exploited in a legal sense, you need to talk to your local jurisdiction's employment rights agency (state-level within the United States; varies outside of the US.) Particularly if you're in New York or California, these rules are quite complicated and you may want to talk to a local legal aid type place.

In general, in the US, if you're grossing over $290 a week, you are probably being paid at least minimum wage, and then it becomes an "industry standards" kind of question. Once you're above $411.06/week, you're over the highest minimum wage in the US, as far as I know. (This does not take into account overtime or questions relating to things like "promised pay.")

It's impossible to say whether you're being screwed over in terms of industry standards without you telling us a lot more about what you do, how much control you have over your time/working conditions, and what your total pay is on a weekly basis.

It is very unusual, as far as I know, to be paid "hourly" and then only by billable hour. Far more common is to be paid "hourly" (for breathing and being on the clock, basically,) OR to be paid on some funky combination of hourly/commission/billable hour bonus, OR to be paid salary and have hitting certain billable hours a condition of continued employment/huge bonuses/whatever.

Most of the adults I know who do work for clients on behalf of "consulting" firms (which is the closest I can think of to your situation) get a set salary equal to something between 315% and 650% of minimum wage, plus a hefty bonus on reaching a "billable hours" rate of something like 85%. For one family member, that hefty bonus at one point added tens of thousands of dollars a year and was the difference between paying the mortgage and falling behind, which is one of the reasons he stopped working that job. It was also really complex and weird there - you had some productivity stuff based on whether you were assigned to a live project or not, and some to what you did with your time during the week, and 80 hours of billable time in Week 3 would not make up for 0 billable hours in Week 4.
posted by SMPA at 9:17 PM on October 25, 2012 [1 favorite]


As everyone has already said, this situation stinks and is or should be illegal. Basically, your employer wants the best of an employee (who will be on site all day during set hours) and a contractor (whom they can pay only for the hours they actually work). And you get the worst of both worlds.

However I don't agree that whether you should tolerate this depends on how much they are paying you and how badly you need this job. You absolutely should NOT put up with this! "Being flexible with your employer in this economy" translates into "bend over and smile". The more employers get away with shit like this, the more egregious shit they will try. And as long as there is a contingent of yes-men and yes-women to rationalize that they have to accept the unacceptable "because of the economy", this will continue to get worse. Stand up for yourself and your fellow workers.
posted by parrot_person at 9:18 PM on October 25, 2012 [2 favorites]


Yes this is awful, unfair, and very likely illegal. If you're at the office because they asked you to come there, you're working. I think most states have laws to enforce this.

And just a small note that if you're in the U.S. almost no employees have a "contract," and even if they do, a contract in no way gives an employer the right to break state or federal law.
posted by drjimmy11 at 9:19 PM on October 25, 2012


Also - there are a LOT of things that constitute "work" for purposes relating to minimum wages and promised pay and overtime. California ruled that getting dressed for work at Disneyland constituted "work" almost entirely because you had to do it on park property; they resolved the issue by changing park policy and letting employees take the costumes home and get dressed there. An employer that requires you to turn on your computer and be sitting at the phones ready to take your first incoming call is required to pay you for the time it takes to walk in the door, turn on the computer, open the relevant programs, and put on the phone headset. Etc.

To know if it's legal, you must talk to your local employment rules agency.
posted by SMPA at 9:21 PM on October 25, 2012 [2 favorites]


Here's the hotline for the U.S. Department of Labor. Call them. They can help with this.

DOL's Toll-Free Help Line at 1-866-4-USA-DOL (1-866-487-2365). Live assistance is available in English and Spanish, Monday through Friday from 8:00 a.m. to 8:00 p.m. Eastern Time. Additional service is available in more than 140 languages through a translation service.
posted by bananafish at 9:34 PM on October 25, 2012 [3 favorites]


> "Being flexible with your employer in this economy" translates into "bend over and smile".

If the employer is doing okay and is just milking the workers, I agree. But if the employer is just managing to hang on and pay the bills in a struggling economy, and is providing some level of income to a handful of people who are doing the same, that's another story. That's why I prefaced considering flexibility in this matter with a specific set of conditions.

Would it do any good to the individuals involved to get the employer embroiled in questions of legality if the end result would be shutting down the business altogether?

Legality matters, but certainly pragmatism does too, and under particular constraints it may matter a hell of a lot more.
posted by perspicio at 9:41 PM on October 25, 2012


I pretty much agree with what everyone's saying about this being illegal and wrong, etc. But, what you've said here:

To clarify -- there is no problem with me billing admin/office work to the studio if it needs to be done. The discouragement is in finding a lot of chores that don't really need to be done to fill time, so I don't charge for time that I can't account for.

makes me wonder - are you still putting in for 40 hours in your timekeeping system? If you're working at a place with billable hours, I assume your office uses Harvest, Timekeeper, or something similar. If you don't have 40 hours entered for your timecard by the end of they pay period, then yeah, they're not going to pay you if that's their only metric of how much time you spend in the office. Even if you're sitting there doing nothing, you should be entering something in your timecard. If you want to be really cheeky, break it out as a separate "office" entry and label it "waiting for work to do" in the comment section. Of course they discourage employees from filing empty hours, but you do get break time. If they've specifically ordered you not to enter empty time, then it gets illegal for them, but if you're not entering your time spent in the office entirely of your own volition, that's not really their fault.
posted by LionIndex at 11:33 PM on October 25, 2012 [1 favorite]


Small studio, so I'm surprised that there aren't 60+ hour weeks. Why not ask about doing sales work? Perhaps you could get a commission on new business.
posted by anon4now at 11:58 PM on October 25, 2012


Having to be in the office is one of the main differences between being an employee and being a 1099 contractor, along with charging by billable hours rather than hours in the workday. This is a federal beef.

Would it do any good to the individuals involved to get the employer embroiled in questions of legality if the end result would be shutting down the business altogether?

Yes, because the employees with a clue can regroup as a company that operates legally and ethically. There's no shame in firing a boss who can't handle being an employer.
posted by rhizome at 12:20 AM on October 26, 2012 [7 favorites]


Call up the DOL and document, document, document.

A written contract laying out this arrangement might be not only meaningless, but very bad news for the employer. However, you can only find out for sure if you talk to a qualified person in your jurisdiction.

Would it do any good to the individuals involved to get the employer embroiled in questions of legality if the end result would be shutting down the business altogether?

Yes.
posted by Sticherbeast at 3:54 AM on October 26, 2012 [1 favorite]


Would it do any good to the individuals involved to get the employer embroiled in questions of legality if the end result would be shutting down the business altogether?

Yeah, fuck that noise. Dollars to donuts the owners aren't nobly forfeiting or forgoing their pay to keep the shop open and the staff employed--and if they are, that's the only circumstance where you should even consider putting up with this. If they close, you can call up their old clients and offer your services as a freelancer.
posted by pullayup at 5:35 AM on October 26, 2012 [1 favorite]


the problem has been days where I've had to sit around for 2+ hours hoping work will come in

Would they object to you clocking out and working on your own freelance jobs?

(while still in the office and available, I mean.)
posted by TWinbrook8 at 5:39 AM on October 26, 2012


You're being paid as a freelancer and treated as an employee. There's no way this is legal, nor is it ethical.

You actually have some negotiating power here, because very few professionals would put up with this kind of treatment. I'd try talking to your boss, telling them this is unacceptable, and if they stonewall start looking for another job.

Whatever you do, document the hell out of this. Every minute your butt is in the chair in the office should be logged. It would not suprrise me if the department of labor ordered them to pay you back pay for time worked.
posted by zug at 6:55 AM on October 26, 2012


Are you being treated as a W-2 or a 1099?
posted by Sticherbeast at 9:36 AM on October 26, 2012


Would it do any good to the individuals involved to get the employer embroiled in questions of legality if the end result would be shutting down the business altogether?

i don't understand that nonsense. it's not going to shut this business down. i'm a designer/art director. i have worked in this industry for over 10 years. i have never heard of this kind of employment situation. if there's so little work that your 3 person studio isn't slammed all the time with work, then your employer needs to not be hiring "full-time" employees who are expected to show up and be accountable from 8-5 but not get paid for all the hours that aren't billable. your employee needs to convert anyone who isn't getting paid their 40 hours a week to freelance status wherein he can then legally only pay for the hours the employee works. you're wasting those other hours where you are sitting in the studio not getting paid. those hours could be used on actual paying freelance work so that you can make more than a subsistence living.

so yeah, your employer should either pay you like a real full-time employee or pay you like a freelancer—not the bullshit way s/he is doing it that benefits no one but him/her.
posted by violetk at 10:06 AM on October 26, 2012 [2 favorites]


If your employer dictates where and when you do the work (assuming you're in the US) then the federal government considers you an employee, not a contractor, no matter what the company calls you. The feds can and will come down hard on employers for things like this, because it usually means they are avoiding payroll taxes.
posted by postel's law at 1:16 PM on October 26, 2012


I was part of a class action lawsuit that dealt with a similar situation. I worked for a catering staffing agency that required that all staff arrive at the office at a certain time before an event, but we weren't on the clock until we were at the job site. So, if I had to be at the catering office at 2:00 PM, I often wouldn't start getting paid until 5:00 PM.

I thought it was bullshit, but I was nineteen and it was a summer job. Two years later I got a check in the mail for fifty bucks.

In sum: If you are required to be somewhere at a certain time for your job, they need to pay you for that time. I'm not sure how your employer can solve this, but the current situation is exploitative and disrespectful.
posted by ablazingsaddle at 6:32 PM on October 26, 2012


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