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After you quit.

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lecherroAfter you quit.
by on Aug 30, 2006 at 10:25:29 pm

I have recently gone freelance. My former employer has informed me that I am not to expect to be paid for hours billed on top of a salary.
The agreement was a base salary and a per hour for hours billed. Am i wrong to expect to be paid for these hours billed? Or Should i hire a lawyer?
Please has any one got advice. Thanks in advance

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tony salgadoRe: After you quit.
by on Aug 30, 2006 at 11:43:14 pm

If you are freelance you will have no salary just paid on a per job basis for only the hours you are working.

Yeah Freelancer can be scary if you don't find alot of work real fast and consistent.

A nine to five hours a steady paycheck but freelancer offers a higher day rate but along with that you are responsible for your own medical insurance, business insurance if needed, taxes etc etc etc.

If this is your first time freelancing full time then all I can say is start saving all your money to allow you to float thru the slow times.

Good luck,

Tony Salgado

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debeRe: After you quit.
by on Aug 31, 2006 at 5:14:46 am

I think you need to explain this more. Is he backing out of paying you for hours billed while you were still an employee, or is he saying from here on out, the rate will change? I don't think he can back out of money you've already earned under your employee agreement. The future freelance agreement is up in the air, and the beauty of that is you get to choose whether or not you want to continue working for someone who's like that. You get to set the terms. Your rate is your rate. They don't get to tell you what the job pays. Well, they can try, but you are in control. You can say no.

If he's backing out of the agreement he had with you as an employee while you were still an employee, stand your ground. I wouldn't recommend laywering up quite yet. He just might be trying to find out how far he can push you.

As a freelancer for the past 6 and a half years, I will share with you the most important advice I received when I struck out on my own: Plan to need 50% MORE than you were making on staff to live the same lifestyle. Just to make the math easy, if you had a $40K staff job with decent benefits, you will need to make at least $60K freelance to have the same household income and to provide yourself with similar benefits. This will cover your insurance, retirement, the employers' half of the Social Security taxes (yes, the beauty of not having a boss means you have to pay the government for the priviledge...), and for "time off" (or, more likely, down time...).

Also, the best way I have found to make sure the money is there to pay the tax man, the insurance man, and to fund the retirement accounts is to have an account that you can split deposits into. I have a checking account and a money market account that are tied together, so I can depost part of a check into one account and the rest into another with the same deposit slip. 55% of EVERY invoice paid goes into the checking account to pay my business blls and to pay myself. 45% goes directly into the money market acocunt and only comes out to pay taxes, insurance premiums, and retirement funds. I do not "dip in" under any circumstances, unless they're coming to take away the house because I defaulted on the mortgage. It's amazing how often that never happens, and it's also pretty eye-opening to see what you can do without, or wait to purchase, if you limit your access. After the taxes are done for the year, whatever is left over is mine to play with. This is also incentive to get cracking on the taxes as soon as the 1099's come in!

It takes diligence, and some folks can't sit on multiple thousands of dollars without spending it, but when it's time to pay quarterly taxes, you'll be very glad you have the money. I know far too many freelancers who don't think about taxes until it's waaaaaay too late. It's ends up messing them up somethin' fierce. Most of the folks I know who had to go back to staff jobs were the ones who couldn't manage their money well enough and got in deep with the tax man. No only did they get themselves in nasty trouble with the government, but they neglected their retirement savings. The best gift you can give to yourself as a freelancer is to max out your retirement accounts as many years as you can.

Anyway, back to your question. Don't let him push you around. Stand your ground if he's trying to back out of your original agreement while you are still technically an employee. Be firm, polite, and professional. Be prepared to walk away. If he welches on your original agreement, I'm not sure you are obligated to remain there for your two-week notice, or whatever. I'm not a lawyer, and I'm pretty sure I've never played on on tv, so this is not legal advice. I'd just tell him that "As long as I am an employee of this company, I expect the agreement we had in place to remain the same until I am no longer an employee" You are allowed to quit a job. You are allowed to decide that it's time to move on, and you should not be penalized by a good employer for making a hard decision that is in your own best interest.

You could posture that you are prepared to seek out a lawyer, but really, unless it's multiple tens of thousands of dollars, what you would have to pay the laywer might make it seem hardly worth it. Look into it, certainly, if he's trying to welch on an agreement, but be prepared to hear something along the lines of $400 an hour for at least 40 hours as starting point for getting legal representation. Of course there is the possibility the laywer will work on contingency....but that gets dicey too. Then s/he might get as much as 40% of what you win, maybe more, maybe less. It depends on your area, and what's customary. It's a huge can o'worms when you get the legal system involved. I'm not trying to talk you out of it necessarily, but just be prepared for it to be expensive, and to take years, if you choose to go that route. I know a guy who won a summary judgement against a former employer who pulled multiple fast ones when he quit. It took over a year to get to the judgement phase. He was awarded $40K. The lawyer took 40% off the top. The former employer eventually stopped making payments and closed his bank account. My friend received about $5000 of his $24K of the $40K judgement. The laywer got his $16K. I think it took over two years to get to that point (I'm a little fuzzy on the timeline. I may be off a little). In order to get the rest of his money, he had to get the sheriff involved. I actually lost track of the story. He may have gotten more of the money by now, but by now I think it's been over 5 years. The lawsuit so consumed him for so many years, that he did somewhat regret what he got financially over what he lost personally. Not all cases are the same, but I hope you can see the murky point I'm trying to make. It almost has to be more the principle of the thing than to be about the money to make it worth it.

Of course, if it's a small amount, and I don't know how small it needs to be to qualify, but you can avoid the whole lawyer thing and look into small claims court, as well.

Sorry for the lengthy post, but I remember first venturing out into the unknown of the post-staff job world. I hope something in here helps you during your transition!


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Mark SuszkoRe: After you quit.
by on Aug 31, 2006 at 2:01:40 pm

That was an awesome post, I agree with everything in it.

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Ron LindeboomRe: After you quit. -- This is a GREAT post, Debe
by on Aug 31, 2006 at 2:27:09 pm

Thanks for a great post, Debe. You put a lot of time and thought into it and we appreciate your effort.

Best regards,

Ron Lindeboom

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debeRe: After you quit. -- This is a GREAT post, Debe
by on Aug 31, 2006 at 7:54:29 pm


Multiple nods, and from the Grand Poobah, himself, none the less!


I actually almost lost the whole post. As Webmaster Eric figured out, I had a tragic typo that triggered the "Parental Advisory-Explicit Content" filter. Oopsie! ...and I proofread, really I do!

I suppose posting because I'm exhausted yet can't sleep is a recipe for typos!

Thanks for the kind words. I also think Tony's suggestion below about the labor board is excellent. I never even considered that!


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Nick GriffinRe: After you quit. -- This is a GREAT post, Debe
by on Sep 1, 2006 at 11:34:52 am

As Mark and Ron said above, great post, debe!

Legal proceedings are only worth it when there's AT LEAST a high five figures or more involved. Or, as stated, if it's a matter of pride. And then you've got to figure out just how much pride you can afford.

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Mark PopeRe: After you quit.
by on Aug 31, 2006 at 5:01:27 pm

I wish I'd read something like this when I went freelance. Maybe I did, and didn't believe it. I sure do now!

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Frank OttoRe: After you quit.
by on Aug 31, 2006 at 6:56:43 pm

Debe, what a great post!

This is the kind of nuts and bolts answer that so many new to freelancers need. Most of us have been at it for so long that we tend to just say "you'll need more money," "don't forget to pay yourself," etc. This one sets a guideline that's easilly followed and easilly modified for individual use. this a keeper or what?

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lecherroRe: After you quit.
by on Sep 3, 2006 at 12:03:42 am

Thank you so much for the advice. Its a pretty small sum of money, but the principal is there, and i dont want to just lie back and take it.
Your INfo was great, I will heed your advice.

Thank you.

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tony salgadoRe: After you quit.
by on Aug 31, 2006 at 5:38:17 pm

If the disagreement is based on your employee status forget the lawyer and deal with your state labor board.

But long before you do that exhaust all efforts to resolve the problem between yourselves and as a last resort file a complaint with the labor board.

Tony Salgado

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