The creative industry is a one-of-a-kind, complex ecosystem, with the client (and occasionally the client’s client), the agency (and sometimes the agency’s parent business), agency workers, and, of course, freelancers.
Hiring freelancers is critical to the creative industry ecosystem, but doing so as an independent contractor can be challenging due to client-driven contractual responsibilities and state-specific rules. Although agencies have transitioned to recruiting freelancers as temporary employees, many wrongly believe that it is as simple as paying these workers the same day rate they got as independent contractors.
It’s Not That Easy
According to this strategy, freelancers would be paid a fixed amount for each day worked, regardless of the number of hours worked in the workday. The freelancer has a certain amount of money, and the agency has budget predictability – it appears to be a win-win situation, but it’s unfortunately too good to be true.
What is the Issue?
Many agencies assume that by paying W-2 employees a day rate, the workers will not be entitled to overtime (OT). They may also believe that freelancers do not need to track their hours. Both of these assumptions are incorrect. If W-2 freelancers fail to track hours and are not paid overtime, agencies are in violation of wage and hour laws. This results in noncompliance, legal liability, and financial penalties. Here you will find some of the tools a freelancer needs.
Day Rate Essentials: Why Do Companies Pay Creative Employees This Way, And What They Often Get Wrong
Day rate compensation is sometimes perceived as easy by agencies – one day of work, one day of pay.
It’s not quite that simple. When it comes to day rates, each hour worked must be paid at the correct rate, which can only be calculated correctly if agencies track and record W-2 employees’ hours accurately.
Failure to pay non-exempt employees a premium rate for extra hours worked is a clear violation of federal law, according to the Fair Labor Standards Act (FLSA). Overtime is defined by the FLSA as hours worked in excess of 40 each workweek, and overtime pay must be at least 1.5 times the regular rate. Some states, such as California, have more generous overtime requirements that necessitate additional tracking to ensure daily OT calculations are met.
When a freelancer works more than 40 hours in a workweek, the OT compensation calculations begin in most countries. The employer must add the relevant overtime or double time premium to the ordinary pay rate in order to appropriately compute OT amounts due. It’s simple math when you hire someone on an hourly basis. When you hire someone on a day rate, the hourly rate must be recalculated regularly (sometimes as often as once a week) because the standard rate is based on the weekly total number of hours worked.
Without a doubt, all of the late-night and early-morning work will pay off. Overtime effort opens the way to success, especially for newcomers. Every day, you may have the opportunity to learn something new, improve your abilities, and acquire experience. However, I would never encourage doing unpaid overtime since I would never do it myself. You have the right to request overtime pay whether you are seasoned or new to freelancing in your field.
Here are some pointers to avoid clients who request unpaid overtime.
1. Initial Negotiation
Negotiating with the client is critical for avoiding arguments and conflicts. You can avoid unpaid overtime by negotiating. Although it is not simple, it can help you settle all doubts; nevertheless, make sure you remain professional and respectful in your dealings or you may wind up in a dispute. Before project confirmation, inform the customer that if he wants you to conduct extra work, he must pay you for overtime. However, keep in mind that you may only request extra pay if the workload originates from the client’s side. On the other hand, if you have flaws such as making mistakes, failing to follow instructions, or taking too long to complete a task, you cannot request overtime pay.
2. Opt for hourly pay
There are two options for negotiating hourly pay. The first option is more practical and ethical: ask your client at the start of the project if you want to be paid on an hourly basis and track time to ensure you get paid correctly. Then, regardless of how much time you spend on the project, you will get compensated proportionately.
The second method may get you into problems, but if you notice the personality of the client is difficult to deal with or he is pushing you to do extra work, be cunning. Consider using an automated procedure, such as time tracking apps, check stub maker which is popular in the freelancing and on-demand communities. Consider it evidence to show your client that you worked overtime and are entitled to overtime pay.
3. Sharpen Your Skills – Practice
Ascertain that you are a seasoned freelancer. Until and unless you believe you deserve overtime money, overtime is the finest opportunity to polish yourself. As a freelancer, you are entitled to extra pay if you are capable of meeting your employer’s expectations and delivering your service on time. Once he is satisfied with your work, your chances of getting paid for more labor will increase, because if you are not willing to work for nothing, but your employer is delighted with your service, he will undoubtedly consider your demands.
4. Time Management – Avoid Overtime
Time is money, and you must manage your money in order to avoid overspending or you will go bankrupt. Yes, you read it correctly; the second step for staying ahead and avoiding overtime is to manage your projects on schedule. Effective time management is essential to success in all aspects of life, and the unconventional workforce must recognize this if they want to raise their income and live a carefree life. Make a schedule before beginning a project and aim to complete tasks on time. Over time could be avoided if you complete your gig or meet your milestone target on time by sticking to the timetable.