Multiple Rates

“My skilled employees are paid a high rate because they work with clients and I can bill my clients for their time. However, now I’m starting company meetings and I really don’t want to pay that high rate for them to attend my meetings since I can’t bill for that time. What are my options?”

Your HR Survival Tip

While California can be very picky about wages, we do have some options regarding pay. California has recognized the different values of different types of work for years. The state already allows us to pay employees minimum wage for time spent driving when that isn’t their normal job. This is because you didn’t hire that person to be a driver. You hired them to be a therapist, electrician, plumber, etc…a job that typically earns a higher wage. It makes sense to pay a skilled employee more but you aren’t going to be excited to pay them that amount if they aren’t doing that level of work.

Just a few examples of employees who might earn two different rates include:

  • Your employee is a licensed therapist. They could earn a higher wage when working with clients versus time spent at your company meetings.

  • Your employee is a certified consultant. When working with clients they could earn a higher wage versus time spent in your weekly online meetings.

  • Your employee is a trainer. They could earn a higher wage performing their primary training duties versus doing the cleaning for your company.

As you might have noticed in the above examples, there is a big difference in the type of work between one role versus the other. You want to be able to fully justify each rate. You already have a justification for their normal, higher rate. You just need an equally reasonable justification for paying them the lower rate. Just be sure the lower rate doesn’t include any of their skills paid at the higher rate. You want a clean division of skills or talents needed for each type of paid time.

Once you have a solid justification, you need to implement the rates properly. You want a printed document that includes details about both rates and the employee’s signature on the document. The document must name each rate (such as skilled and base rates), the amount paid for each (plus the overtime and double-time rates), and the effective date. Provide the affected employees at least a couple of weeks’ notice before you implement these rates.

Be aware not everyone will be thrilled with a lower rate for any reason because this really only benefits you. You could choose a lower rate that saves you money but doesn’t appear too low to them or you could implement the lower rate by reducing it a bit periodically over time. The messaging you use to explain this policy will make a big difference in how well it’s received.

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