Here at HWS HQ we keep track of interesting questions from clients and partners to help keep our finger on the pulse of the industry. This helps us create the content and resources we are so happy to share!
Recently we’ve been hearing from agency partners looking for feedback we get from their clients, a “did they say anything about how it was working with me?” type question. Like all good business owners, they want to make sure they are doing everything they can to help their clients. Here are a few things we hear from the other side of the placement conversation.
All in Budgeting – This one can be a particularly complicated conversation. Gross wages, overtime, taxes, service fees, workers’ comp, etc all differ from state to state and there are even a few choices for the employer thrown in to make it more of a moving target.
Here is one way to get to a fairly reliable ballpark cost for a client. Start with the GROSS hourly wage, multiply it by one week’s worth of hours to be worked (include overtime if applicable), then multiply that by 52. This will get you to an annual gross wage. From that number add in another 10-12% for taxes. This will be the employer taxes assuming they want to withhold all applicable taxes from their employee (we highly recommend this). Workers’ comp is usually about one week’s worth of gross wages for an annual policy so add that in as well. This will be a pretty good number for them to see a true cost; it doesn’t include any service fees though so keep that in mind.
A four step calculation:
- $12 per hour X 40 hours per week = $480 gross per week
- $480 X 52 weeks = $24,960 gross wages per year
- $24,960 X 1.12 = $27,955.20 gross wage and employer taxes assuming 12% in taxes
- $27,955.20 + $480 = $28,435.20 which would be a ballpark annual cost for all wages, taxes, and workers’ comp insurance.
NOTE: If the compensation is in NET wages to begin with you will first need to do a “gross up” calculation. Depending on how the employer wants to do things, a gross up could mean the tax rate getting close to 20% as opposed to 10-12%. We always recommend talking in terms of gross wage, or before-tax wages.
If these numbers are making your head spin, or you simply don't have the time to do this for every client, we would be happy to do it for you. We often work with agency clients at the beginning of their search to understand budget, and can refine these numbers for them come offer time.
Unusual State Specific Laws – This one is obviously more of a need in some states than others. We do hear some clients needing to make adjustments to their contracts based on some of these trickier laws. Here are a few examples:
- In New York, household employees must be paid on a weekly basis.
- The state of California has devised a maze of overtime laws including weekly overtime, daily overtime, and even daily double time.
- Some states provide extra protection to live-in workers by guaranteeing overtime pay, others don’t, and still others change the time frame for when live-in overtime starts.
As you can see these laws get a little nuanced. Some of them will show up on the State Tip Sheets we give you but your best bet is to give us a call or email and we’ll tell you all about any weird payroll laws in your state.
Timetables – There isn’t a lot we can do to help you with this one other than to let you know we hear about it. Some clients are a little weary when they get to us because of a long placement process. Maybe it’s a complicated series of interviews, or maybe you’re tasked with finding a nanny at minimum wage for a household with three kids and a dog, whatever it is, trying to give some sort of timetable could be helpful. Clients tell us that knowing average placement time length, or ranges of time for placement helps. As does knowing any specific factors that might lengthen, or shorten their search time.
Keep in mind that we hear far more positives about client's experiences with agencies, than points of concern. We often hear about how well you listened to their needs, gained their trust through your expertise, and provided high quality vetted candidates. We know agencies walk a fine line of how much payroll and tax information they want to give their clients (we’re here as a partner for a reason!) so do think of these points in the context of your business. If you have any questions please don’t hesitate to ask!