Should wages change when a part-time position becomes full-time?
December 22, 2021 8:20 PM   Subscribe

I found out that the person who had my job before me, when it was 20 hrs/wk instead of 40 as it is for me, was being paid a higher hourly wage. My boss told me this is because part-time positions often have their wages reduced when they become full-time. Is it common to pay part-time employees higher wages than their full-time counterparts? Is it fair?

(Trying to leave out unnecessary details ... bear with me!)

I've had a full-time job at a very small company for 2 years. I'm the only full-time and year-round employee, working for 2 bosses who own the business and who also work here full-time. Before i was here, they had a person fulfilling a smaller version of my same role, at only 20 hrs/ week. I learned somewhat recently that that person was getting paid a higher wage than me -- and when I brought this up with my bosses at a bi-annual feedback meeting, they said that that person was paid more hourly because her position was part time. In making the position full-time, they said, they reduced the wage knowing that the full-time person would still make enough money to live on, because there were more hours. This doesn't make sense to me, but i've never been in their shoes, running a business. Is it a common practice to reduce wages when a position adds hours? If so, how is it justified?

To be clear, the difference isn't made up with benefits -- i do not have any benefits except that my predecessor was (illegally) paid as a 1099 contract worker, whereas i am on payroll and thus have access to unemployment insurance and workers' comp. Further, i can't explain this on the basis of experience, as i have more experience in the field than my predecessor did. In case it matters, i don't think any form of discrimination is at work here.

(As a side note, my bosses are a married couple and tend to reinforce what each other say, even in cases where it seems unreasonable to me. Not always though.)

Any experience with similar situations? If you think that it seems unfair, any suggestions on how to paint the same picture to my bosses?
posted by the_arbiter to Work & Money (21 answers total)
 
Best answer: Their explanation about getting more hours and therefore needing less makes no sense. However, the fact that they were paying the prior worker as a 1099 instead of as an employee does explain the difference. It’s not uncommon to pay contractors about 50 percent higher, between the payroll taxes you don’t have to pay, insurance costs you don’t have, etc. I know you said you don’t have any different benefits, but as a 1099 you usually have to furnish your own liability insurance , etc.

I would guess that they are paying the same or more per hour for your role , vs the prior role. But their actual explanation is ridiculous.
posted by Happydaz at 8:36 PM on December 22, 2021 [21 favorites]


Employers can offer any wage for work that employees agree to, provided the wage is at least minimum wage (for jobs subject to the FLSA) and provided wage does not change based on protected categories. You seem to think there is no discrimination here, so it is quite likely your employer's actions are legal.

Now, legal doesn't mean "fair". I would suggest excising that term from your vocabulary when talking with your management. Your management really doesn't care what is fair - they want to maximize their profits, and an easy way to do that is by underpaying you.

From an employer's perspective, the ideal wage to pay any employee is the lower of two numbers:
  1. The lowest wage necessary to keep the employee working for the employer.
  2. The amount of money necessary to replace the employee, with all hiring/training/etc costs included.
As an employee, you need to understand what the cost of 2) is so that you can make 1) be as high as 2) is. The way to do that is understand your worth on the market, and the easiest way to do that is to get a competing job offer. If your employer matches that number, then your problem is solved. If your employer doesn't match that number, your problem is solved at a new employer.
posted by saeculorum at 8:41 PM on December 22, 2021 [7 favorites]


Best answer: You have 3 options, take it, leave it, or push for more money. Since the bosses declined option three...

Look for a new job, there are tons of places short staffed that will pay you more money currently.

Your bosses will have to pay your replacement more money but they won't pay you that money.

Unfortunately that's the nature of bosses. Job hop for a salary increase. They wont show you any loyalty. And they don't deserve any underpaying you
posted by TheAdamist at 9:51 PM on December 22, 2021 [10 favorites]


There's really no concept of "fair" in business. It's in the owner's best interest to pay you as little as possible and for your own best interest to be paid as much as possible. They are just making up an excuse (any excuse) to not pay you more.

If the owner truly believes that part time employees should be paid more hourly that full time employees, and by your admission, there are no benefits to you for being full time vs part time, you should offer to work less hours, getting a higher hourly wage, so that you will get paid the same in total but work less hours. (You would need to make twice as much hourly in order to work half the hours, etc). They will absolutely not go for this.
posted by meowzilla at 9:55 PM on December 22, 2021 [4 favorites]


Best answer: Their explanation about getting more hours and therefore needing less makes no sense. However, the fact that they were paying the prior worker as a 1099 instead of as an employee does explain the difference.

Happydaz makes an excellent point, but the fact that they didn’t put their explanation in those terms would make me nervous about whether they are withholding money from your wages and sending it to the IRS in the first place.

I suggest finding that out as soon as you can while being as circumspect as possible. Going to the IRS and asking could make the whole situation blow up, I’d think, so it might be best to have a good idea what the answer is likely to be before going that route. You’ve been working there for two years, so probably everything is pretty OK, but the last two years have been chaotic, and the IRS might be behind in enforcement actions when it comes to businesses with 3 employees.
posted by jamjam at 9:59 PM on December 22, 2021 [2 favorites]


On the fairness of it—in Australia casual wage rates on the award (the minimum lawful rate) include a ‘casual loading’ which is meant to substitute for the leave entitlements casuals don’t get. But that’s casual workers; ongoing part-timers are not casuals, and should be paid a pro-rata rate from a full-time equivalent. That’s how it works here, and people see it as more or less fair—to the point where ‘sham’ casual contracts, to get out of paying for leave, are frowned on by everyone decent and right-minded.
posted by Fiasco da Gama at 10:13 PM on December 22, 2021 [4 favorites]


I have never heard of a worker being paid a lower hourly wage just because they were full-time, no. Others above have done a good job of explaining factors that go into why some people are sometimes paid more or less for the same work, but no, it's not some common practice for - all other factors being equal - a part-time worker automatically being paid more per hour just for being part-time. Certainly not during my time working in HR or labor relations.
posted by The Underpants Monster at 10:47 PM on December 22, 2021


I'm not going to argue legalities, but try to be simple

1. They paid a person "X" dollars to perform each hour of labor, and each hour of labor produces "Y" result for them
2. They are now trying to pay _you_ less than "X" dollars for each hour of labor which still produces "Y" result

Seems to me that your hours of labor should be worth at least "X" as they produce at least "Y" for the employer. Remember, though, that "X" is not only hourly wages, but also an hourly amount representing the benefits you get that the part-timer didn't.
posted by TimHare at 11:34 PM on December 22, 2021 [1 favorite]


how is it justified?

It never is. It's merely done. Anything that sounds like it might be a justification will always boil down to nothing more than an appeal to tradition.
posted by flabdablet at 3:00 AM on December 23, 2021 [3 favorites]


Best answer: The 1099 situation is a full and reasonable one - it’s absolutely common for 1099 contractors to be paid more per hour because of the tax situation, and to have their hourly wage reduced if they become employees, full- or part-time. It IS odd that this isn’t the explanation you were given, though I wonder if they didn’t want to draw any more attention to the apparently incorrect classification of the role as 1099 previously.

Regardless, appealing to what predecessors in the role have made isn’t typically the way to get a raise. You note that you have more experience, but the previous person may have brought other skills (including the “soft” skills that are hard to quantify) to the table, or may have worked their way up to that higher wage after many years of raises, or may simply have negotiated better. Or they may have decided (correctly or not) that they were overpaying for the role, but couldn’t take back an agreed-upon salary, but decided to readjust it when the time came to hire again. Who knows.

In most workplaces you’d get better traction showing that your wage is inequitable based on what you could get right now for a similar role elsewhere. If you can show them salary listings from competitors that are much higher than yours, that’s how I’d tackle it.
posted by Stacey at 3:48 AM on December 23, 2021 [1 favorite]


I have never heard of a worker being paid a lower hourly wage just because they were full-time, no

I have, in small business (not the one I work in, but we belong to an umbrella group of owners.) Small business has pluses and minuses.

A plus would be for Sam, who started out working for small Business A part time. Over time, Sam needed enough money to pay Sam’s rent and even though small Business A’s owner wasn’t thrilled about it, owner A didn’t want to hire/retrain and so paid Sam more.

Then Sam left and business owner A thought hey, given that I learned that to retain Sam I needed to pay Sam enough to pay rent, this time I’ll hire a full time person because I actually could also use help with these 2 other things. And I’ll just pay them a liveable wage for it with the money I was spending before, maybe a little more, win-win, I’ve got a full time help and they have a job that pays rent.

Even if, minus, the wage per hour is lower.

This is how a lot of small business owners think. They don’t have salary grids and HR rules (hence the 1099 thing). They are often used to hiring tradespeople or negotiating with suppliers, where you bargain the price to something mutually agreeable, rather than setting up pay scales.

So for your business owner, they will see their decision to hire a full time person as creating a decent job, where before they had a part-time job. It’s a different concept of fair.

(I’m not taking a position. I’ve spent a couple of years going from large to small business and learning what the weird eddies are. One rule of thumb is in a really small business, the owner sets the culture. So if you don’t feel right about the owner it’s good to start looking.)
posted by warriorqueen at 4:03 AM on December 23, 2021 [5 favorites]


Best answer: I have never heard of a worker being paid a lower hourly wage just because they were full-time, no

Okay, so this happened to me at my last job, except in my case I was the part-time 1099 consultant/contractor and they created a new, full-time W2 position for me when their business grew. Working as a 1099 consultant, let's say I made 50/hour and worked anywhere from 0-30 hours per week. Working as a W2, let's say I made 25/hour working full time, 35-45 hours per week.

In my case, the full-time W2 position was a better deal for both myself and the employer for a few reasons:

1. Working as a 1099, I was responsible for paying all my own employment taxes, healthcare, overhead, insurance, pto, etc., so that took a chunk out of my hourly rate. Working as a W2 employee, my employer paid healthcare, matching 401(k), disability insurance, bonuses and profitsharing.
2. As a consultant, although I was paid a higher rate on most weeks I made less per week because I had fewer hours, so working full-time as an employee meant I made more money overall.
3. Working as a full-time employee meant less risk for both of us, in general -- as a consultant/contractor, you trade job security for higher pay, and being part of the team gave me more stability, which was valuable to me. And it also meant that I didn't have to keep scrambling for other clients and navigating an uneven income, which at that time in my life, in that particular field, I had very little energy for.

When I left the company with a plan to return to freelancing, I was invited to continue as a consultant, and the rate we discussed would have been roughly twice my final hourly rate after three years as a full-time employee.

So, no, it's not all that uncommon. What seems uncommon to me is that you're not receiving benefits to help close the gap -- healthcare, 401(k), pto, etc. Those are valuable and can add up to 25% or more to your overall compensation.

In your case, with two years of experience there but without those benefits, I'd be looking for another job. Or I'd offer to go 1099 part time at the higher rate and find a second gig.
posted by mochapickle at 4:08 AM on December 23, 2021 [7 favorites]


Unless you work for the government or an extremely regulated industry, you cannot ascribe any meaning at all to your wage vs another employee's wage. The circumstances at hiring are completely unrelated for each individual and a company has no requirement or motivation to match salaries with anyone else holding that role. What you get paid is the lowest amount they can get away with paying you that's just high enough to keep you from looking elsewhere. Whatever meaning your company ascribes to the difference in hourly wage is honestly irrelevant, because there doesn't have to be any meaning at all.

What I'm more surprised by is you've been working full time someplace for two years that doesn't offer any benefits. Get out of there!!! This isn't April 2020 anymore, tons of places are hiring, companies are getting competitive. You have options.
posted by phunniemee at 5:13 AM on December 23, 2021 [2 favorites]


Concur: it's a great time to look for a new job and shitty time for them to find your replacement. I'd quit just for the revenge satisfaction. These people are scumbags.
posted by spitbull at 6:04 AM on December 23, 2021 [2 favorites]


Best answer: TL;DR -- their reason is BS.

Combined with the fact that you are not getting ANY benefits, means this job is BS too.

I'd start putting feelers out that you may be ready for a change of scenery.
posted by kschang at 7:09 AM on December 23, 2021 [1 favorite]


I have never heard of a worker being paid a lower hourly wage just because they were full-time, no

Okay, so this happened to me at my last job, except in my case I was the part-time 1099 consultant/contractor and they created a new, full-time W2 position for me when their business grew.


So, then, it wasn't JUST because you moved between full- and part-time. Your status changed from contractor to employee, and all other factors were not equal.
posted by The Underpants Monster at 9:50 AM on December 23, 2021


What jumped out at me - you are working full time and you get no benefits? Yikes.
posted by RajahKing at 10:00 AM on December 23, 2021


So, then, it wasn't JUST because you moved between full- and part-time. Your status changed from contractor to employee, and all other factors were not equal.

I'm not sure what you mean. I was one of literally dozens of contractors, but the position was for someone with my particular skillset. While I was a full-time employee, the other contractors remained as contractors with both their higher hourly rate and the liberty to decline contracts with my employer.

As a point of clarification, when I was initially hired as W2, the company didn't have all the benefits I listed. No healthcare, a total of 10 days sick/vacation time. As the company grew to nearly triple the size, the benefits increased to be able to attract niche applicants.
posted by mochapickle at 10:06 AM on December 23, 2021


I'm not sure what you mean.


OK, I said:
I have never heard of a worker being paid a lower hourly wage just because they were full-time... it's not some common practice for - all other factors being equal - a part-time worker automatically being paid more per hour just for being part-time.
You replied:
Okay, so this happened to me at my last job, except in my case I was the part-time 1099 consultant/contractor and they created a new, full-time W2 position for me when their business grew.
I replied:
So, then, it wasn't JUST because you moved between full- and part-time. Your status changed from contractor to employee, and all other factors were not equal.
To paraphrase:

Me: I've never heard of A happening solely as a result of B happening by itself under condition C.

You: I have! It happened to me! A happened to me as a result of B and other things happening under conditions D and E!

Me: So, not solely under condition B, like I was talking about?

You: I'm not sure what you mean.

I won't waste any more of everybody's time hashing it out. I think what I said was pretty clear, and if it doesn't apply to a particular reader's own personal circumstances, that's OK. It wasn't meant to describe every possible employment situation that exists on planet Earth. If it's not helpful to OP, my apologies and they shouldn't feel obligated to take it into consideration.
posted by The Underpants Monster at 11:21 AM on December 23, 2021


Ah, I do see. My original comment was intended to agree with yours and several others and provide an example of how this worked in a different work environment, the difference between 1099 and W2. In retrospect, I should have left off the direct quote.

And so sorry for the detour, all. I think we’re all clear though that the_arbiter may well benefit by re-examining their options.
posted by mochapickle at 11:56 AM on December 23, 2021 [1 favorite]


Response by poster: Thanks, everyone! I appreciate the insights about 1099 vs. W2 costs to the employer specifically -- and i can see better why the additional costs to the employer of having a W2 employee would sometimes result in them lowering the wage. But i still don't think it's "fair", or to avoid that sentiment as suggested, it doesn't make me feel good. I have been thinking about looking for other jobs, and may well begin doing so. I work in an unusual industry with very limited job options regionally, but will begin putting feelers out -- at the very least, to generate some more information about comparable jobs to bring back to the table when i ask for benefits.
posted by the_arbiter at 2:04 PM on December 23, 2021 [3 favorites]


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