What obstacles are there, from an employer's view, to change contract from hourly to salary and how do I overcome those?

Question

Question:

What reasons might my employer have to decline my request for salary, and how can I refute these?

Background:

I have been with my employer for a little over a year. I am a designer, which is typically a salaried position. However, I was in need of a change and took this position even though it is hourly. At the time I was sold on the idea that I would get significant overtime, and thus hourly would be a benefit.

For the past year my role has increased significantly here, and I rarely work in my own department anymore, instead I work directly with senior management. I receive a lot of praise and have just completed my 1 year review, which was glowing.

Tasks take me far less time than other designers. I find myself having to "stretch" to 40 hours weekly, even when working on large projects. I've only received overtime 4 times in the past year that were over 45 hours. About half the year (during big projects) I get 2-3 hours overtime each week. The bottom line is, I'm doing excellent work (as per my review) and doing it quickly. But I am forced to fill my time with mundane tasks, or purposely slow myself in order to reach 40 hours weekly.

Additionally, I will be off on maternity leave for 12 weeks in April. My change in family status has caused me to re-evaluate my working situation. I am no longer satisfied wasting time at the office for the sake of 40 hours, when my work is already completed, and completed well. I'd like the freedom to leave during the day to appointments, etc, without worrying about making up those hours on the weekend. This is how I have worked for all other employers, and I've never found an issue completing my work well and on time while salaried.

My direct supervisor (that I rarely work with anymore because of the larger project I am on) suggested that I write out my case for becoming salary. To his knowledge, none of the designers, programmers, etc are salary. He believes this is reserved only for management. I happen to know that all of the sales people are also salary, so that does not appear to be the case. It is important to note we employ about 180 employees, and there is no official HR. Accounting covers HR duties. There is no official salary/hourly policy.

My main points in my case are:

1. As my responsibilities grow, salary will be less expensive for the company.(Vs paying overtime)
2. That after a year's consideration, I believe that salary is something I need to function at my best capacity. (It is demoralizing to receive 38 hours in a week because I completed my work quickly and was left waiting for elements from co-workers.)
3. I will not be seeking a payraise to go with the Salary change.
4. I do not use company benefits, so there is no increase in benefit cost in my becoming salaried.
5. As I become more involved in high profile projects, travel and expenses become vastly more complicated and expensive as I am hourly. (They pay travel time by the hour).
6. Finally, I would like to be paid for the excellent work I complete, rather than the hours I sit in front of my computer. (Leveraging my recent successes.)

Have I missed a valid reason my employer might have for declining my request? Are there any more reasons I can add to strengthen my case?

Edited to correct number of overtime hours worked in a year.

Answer 1

To answer your question directly - and this depends on where you are located, but salaried employees and hourly employees have different burdens on the employer.

I do not use company benefits, so there is no increase in benefit cost in my becoming salaried.

Typically salaried employees also have additional benefits (such as insurance) and hourly wage workers are more "contractors" rather than "staff". There might also be taxing implications (but this is not the right place to ask for those). The point here is that just because you may not be using them, does not mean they are not a burden on the employer.

As my responsibilities grow, salary will be less expensive for the company.(Vs paying overtime)

Depending on how incentives are calculated at your company, it might be cheaper for them to hold on hourly rather than salaried. Unless you know the economics behind it, I would not suggest you use this as an argument.

That after a year's consideration, I believe that salary is something I need to function at my best capacity. (It is demoralizing to receive 38 hours in a week because I completed my work quickly and was left waiting for elements from co-workers.)

This is your actual reason for wanting a salary; so stick with it as it goes directly towards your job satisfaction. If they are keen to keep you onboard; then this is the argument you should stick to and ignore the rest.

However, it seems you might be overqualified for the position or have simply outgrown it. As per your comments:

I've been encouraged to waste time. My direct supervisor has gotten annoyed with my asking him for more assignments, and has suggested reading tech forums etc as "job related research".

This tells me that management doesn't know quite what do with your talent and skills; considering the job assignments given are being done beyond their expectations in terms of time.

They might be deciding how best to position you if you were to be salaried and there may not be a position available.

In short, many reasons behind this and I would caution against coming up with points that have to do with company operations/finances - and stick with things that affect you and your job output/quality/satisfaction. These will resonate with HR better.

Answer 2

I see some red flags concerning your employer here:

Additionally, I will be off on maternity leave for 12 weeks in April. My change in family status has caused me to re-evaluate my working situation. I am no longer satisfied wasting time at the office for the sake of 40 hours, when my work is already completed, and completed well. I'd like the freedom to leave during the day to appointments, etc, without worrying about making up those hours on the weekend. This is how I have worked for all other employers, and I've never found an issue completing my work well and on time while salaried.

My direct supervisor (that I rarely work with anymore because of the larger project I am on) suggested that I write out my case for becoming salary. To his knowledge, none of the designers, programmers, etc are salary. He believes this is reserved only for management. I happen to know that all of the sales people are also salary, so that does not appear to be the case.

Depending on which country you're in, this might actually be illegal. I vaguely recall that in the US there are some federal regulations preventing a company from keeping all/most employees on contractor/temp positions. (N.B.: an overview is at https://www.sba.gov/content/hire-contractor-or-employee)

In some (and probably in all) EU countries they might face penalties for trying to skirt around maternity vacation laws as well, e.g., even in the UK: https://www.gov.uk/maternity-pay-leave/overview never mind in Germany: http://www.howtogermany.com/pages/maternity_protection.html

Regarding your actual question, surely from an employer's immediate economic perspective it would be preferable if every employee were basically temp w/o benefits (and in some countries this is basically the case) and it's also to the immediate advantage of the employer if they never had to deal with maternity vacations (which again in some countries requires them to give paid vacation and keep your post until you return.) I'm not going to turn this into a debate over the merits of welfare capitalism, but basically both issues are related to that. In the long run however, an employer acting in this shortsighted way (even if it is legal in some country) basically ends up being the Walmart in a Costco vs. Walmart situation; see [1] [2]. The long-term cost for a short-sighted employer (when the employees have a choice) is turnover etc. which ends up not being cost-free for the employer, even if the costs are not immediate.

Particularizing the issue to your case, if your employer is set in a Walmart mentality/approach to its workforce, you probably won't be able to convince them, no matter what you tell them. Your best bet in that case is going to be finding another employer, although probably not before you're done with the immediate maternity issue etc. On the other hand, if they care more about the long-run relationship with their employees, arguments about your long-term effectiveness (as suggested by Burhan Khalid) may actually work. But given what you've shared here about what they've told you already, I would not set up my hopes too high.

EDIT: On a related note, I'm vaguely familiar with a company (as in the CTO is an acquaintance/friend-of-a-friend) where the top/business management decided to have only the CTO and the lead programmer as employees and everyone else (including the bulk of technical workers) as temp/contractor. They ended up hiring their temps ever more eastward until they've even "ran out" of Eastern European countries given how they setup their cost concerns. The joke (at a dinner table) was that they'd be looking to hire penguins as temps soon enough.

Answer 3

To suggest an alternative approach:

You write in your comments that you cannot balance out under- and overtime - instead overtime is paid out, and undertime deducts from your vacation time.

This strikes me as highly unusual - where I live (Germany) most people either work fixed shifts (typicall where the job requires presence at certain times - doctors, nurses, waiters etc.), or have flextime, meaning their hours can differ each day, as long as the weekly or monthly sum is met.

Flextime has advantages for both employee and employer: As an employee you gain flexibility (which seems to be what you want); as an employer, the employee cost is more predictable - overtime is rarely paid out, instead people work more during busy periods and go home earlier in quite periods.

Maybe flextime is an alternative for you? You could try discussing this with your employer, as it has advantages for them, too.