Paid Time Off
Question: Hello Bob, I work for an IT staffing company. Our contractors are W2 employees and are offered benefits, but no PTO time. The length of assignments varies depending upon the project. They are paid on an hourly basis for all hours worked – enabling us to invoice the client based on the total hours worked. I’ve been asked to check into changing the status of some contractors to salaried, which would make them eligible for PTO time. My first thought is that as a salaried worker, we would not be able to pay/invoice for more than 40 hours per week. Secondly, we would be creating an inequity if some contractors are offered paid time off while others were not. Am I on the right track? What other issues might this cause? Thanks for your help.
Name: Donna
industry: Staffing
RESPONSE:
Donna,
If your people are W-2 employees, they are not contractors. For the purposes of this response, I will refer to these people as consultants.
Your dilemma seems to be more of a business decision issue than a fairness issue. The fact that the consultants are paid by the hour or paid a salary is not material to offering PTO. This is an internal policy issue that you have to come to grips with. If the consultants are hired on a temporary basis, then you may not be required to offer PTO to temporary employees. You may have to create another employee classification to make this work.
Another issue to think about whenever moving an employee from hourly to salaried status is to be sure the salary offered is at least equal to the pay they employee had as an hourly employee. One way to do this is to look at the total earnings over the past three to six months and determine a salary based on the total earning and not by the base hourly rate.
You are permitted to bill clients for hours worked over 40 in a week and still pay a salary to these individuals. The consultants will still be required to keep track of the time worked for billing purposes. But, you are right in your assessment that when the consultants are on vacation, you cannot bill the clients.
I hope this helps. I am in the office all day, so give me a call. Sometimes it is better to talk your way through an issue.
Thanks for Asking Bob.
Kind regards,
Bob McKenzie