Terms of employment changing - advice for negotiating higher pay?

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rasputin
Posts: 279
Joined: Tue Mar 29, 2011 6:40 pm

Terms of employment changing - advice for negotiating higher pay?

Post by rasputin »

tldr; Wife works hourly and get full time benefits. 401k is being taken away for payroll processing reasons - which we maxed and was matched last year.

37.3% - combination of state and local income tax rate we'll pay on the additional income

Any advice on negotiating a higher rate? Should we suggest she get paid as an independent contractor so we can set up a solo 401k?


More details -
For the past year my wife worked remotely (from Wisconsin) for a company in nyc via a series of temporary contracts that were largely continuous. They provided the same benefits to her as their salaried employees although she's paid hourly. They do not usually have remote employees and found out that they somehow weren't paying her correctly. Something something taxes, they were paying NYS taxes and we'd need to file both NYS and WI tax returns for her. ANYWAY, they decided they needed to pay her through a temp agency to resolve the situation. The temp agency provides a 401k but you're only eligible after a year of employment. Last year we maxed out her 401k contributions and her employer provided a 100% match. Healthcare was available but we didn't use it.

A few years ago she worked in person for the company. She's working as an administrative assistant for a hedge fund. They continuously mention that they'd like to hire someone locally but it doesn't happen. She's at an advantage as she has years of experience in the job. They gave her a $15k bonus for her work last year. They like her and appreciate her work but they're a very 'everyone should be in the office!' culture - or they want to be - even as we go through round after round of covid. She'd likely get paid a bit more if she was in the office but she prefers working from home. (and working in the office isn't worth considering!) It can be a demanding job time wise - they expect you to be at your desk and respond in a moment's notice to any need that may arise.
runningshoes
Posts: 63
Joined: Thu Apr 08, 2021 3:48 pm

Re: Terms of employment changing - advice for negotiating higher pay?

Post by runningshoes »

From an employers view, I'm guessing that they are going to have to pay the temp agency some (rather large) premium and may not want to add the 401k portion your wife is losing, especially grossed up. OTOH the tax payment you referenced going away may balance that so it's worth a conversation. As a back up, since they really like your wife, maybe the fund can apply pressure on the agency to let her contribute to the 401k after 6 months or so (or she can find an agency that doesn't have that restriction and they can work with a different agency)?

Good luck
Topic Author
rasputin
Posts: 279
Joined: Tue Mar 29, 2011 6:40 pm

Re: Terms of employment changing - advice for negotiating higher pay?

Post by rasputin »

Asked to be paid as an independent contractor but their legal department denied the request. The whole thing is quite frustrating but it seems there's little to be done - IMO the employer just isn't very sympathetic. I'm kind of questioning their original reason for doing this - claiming that unemployment insurance wasn't being paid correctly (???) as best I can tell, cross state employment is cross state employment and there's no reason why a particular tax line item should be of concern. They paid her as an NYS employee and WI will credit us for what was paid to NYS.

But the bottom line is that the job still pays well even without the 401k.
OnTrack2020
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Re: Terms of employment changing - advice for negotiating higher pay?

Post by OnTrack2020 »

rasputin wrote: Thu Jan 06, 2022 6:29 pm they expect you to be at your desk and respond in a moment's notice to any need that may arise.
rasputin wrote: Thu Jan 13, 2022 6:54 pm Asked to be paid as an independent contractor but their legal department denied the request. The whole thing is quite frustrating but it seems there's little to be done - IMO the employer just isn't very sympathetic. I'm kind of questioning their original reason for doing this - claiming that unemployment insurance wasn't being paid correctly (???) as best I can tell, cross state employment is cross state employment and there's no reason why a particular tax line item should be of concern. They paid her as an NYS employee and WI will credit us for what was paid to NYS.

But the bottom line is that the job still pays well even without the 401k.
Your wife is not an independent contractor; you mentioned as much in the first post.

Since she is an employee doing work in Wisconsin, they would want to withhold Wisconsin state payroll taxes. They figured out during this process that they have to pay payroll taxes and unemployment taxes to the state of Wisconsin. My guess is they don't want to register their business in the state of Wisconsin to do that. There also may be some rule changes to this due to COVID. Also, logistically, I've never heard of an administrative assistant working from home in another state, but it is what it is.

Are they taking everyone else's 401k away also? How long has she worked there?

Edited to add: Maybe the payroll software the company uses is not/doesn't have the capability to process multiple states. I think your wife needs to talk with her boss/supervisor about losing her 401k and ask how she is going to be "reimbursed" for that benefit going forward.
NabSh
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Location: USA

Re: Terms of employment changing - advice for negotiating higher pay?

Post by NabSh »

From employer prospective many times HR or payroll office have limitations. It is really unfortunate that refuse to do independent contractor. I agree if they are going through a agency, agency would want to have their surcharge or markup.

I suggest your wife should discuss with her supervisor or people leader. He/she would be the best advocate.

Are they offering a salary or asking you for expected salary?
cadreamer2015
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Re: Terms of employment changing - advice for negotiating higher pay?

Post by cadreamer2015 »

I worked for 4 1//2 years as an independent contractor for a very large corporation. At that point they said all independent contractors had to become W-2 employees of a temp agency. I knew some folks who refused to do this and were out of work, but they probably didn't really need the money and were ready to retire anyway. I signed up and worked as a W-2 employee for 9 months before I finally retired. It is what many large companies do to avoid HR issues across multiple states or perhaps being accused of misclassifying someone as a contractor when they really should be an employee.
De gustibus non disputandum est
Weathering
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Re: Terms of employment changing - advice for negotiating higher pay?

Post by Weathering »

Think about it this way, if your wife quits then the employment agency won’t earn a dime. Therefore, she has leverage to convince them that the 401k should be made available to her immediately (and with a match, but the requirement of a match may need to be dropped during negotiation in order to give the staffing firm a win).
rooms222
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Re: Terms of employment changing - advice for negotiating higher pay?

Post by rooms222 »

Also, New York still wants to tax telecommuters who are employees. Start with this thread viewtopic.php?t=337344

and also search telecommuter on this site for many previous discussions about this.
fortunefavored
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Re: Terms of employment changing - advice for negotiating higher pay?

Post by fortunefavored »

If the agency offered a 401k, it would cost the main company more money. So that is unlikely to happen. Removing people from your direct payroll has a lot of benefits to the main company. It moves headcount costs to a more elastic opex, it eliminates lower paid employees to avoid HCE testing for megabackdoor roth, multi jurisdiction tax tracking, etc (especially if this is the ONLY employee in this state.)

I would simply negotiate a higher rate with the agency. The agency can choose to eat it (lower their fee) or charge the company more money (unlikely.) A simple "My 401K was worth 20% of my salary to me, please change my rate to $N+20%" should do.

My guess is they will say "we like you, but not enough to make waves" - time to start job hunting.
niceguy7376
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Re: Terms of employment changing - advice for negotiating higher pay?

Post by niceguy7376 »

So there is a hedge fund and a temp agency and then your spouse who is a W2 of the temp agency.
Is the temp agency now pulling away the 401k benefit? If so, is it just to her or to all employees of the temp agency?

In this case, is it considered a benefit no longer being offered or "terms of employment" changing?
nolesrule
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Re: Terms of employment changing - advice for negotiating higher pay?

Post by nolesrule »

Weathering wrote: Thu Jan 13, 2022 10:04 pm Think about it this way, if your wife quits then the employment agency won’t earn a dime. Therefore, she has leverage to convince them that the 401k should be made available to her immediately (and with a match, but the requirement of a match may need to be dropped during negotiation in order to give the staffing firm a win).
401k eligibility requirements as well as match structure are defined by the plan documents and the terms of the plan document apply to all employees.
Neuron
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Re: Terms of employment changing - advice for negotiating higher pay?

Post by Neuron »

If the temp agency offers a 401K after 1 year of employment, why not ask for credit for the past year of employment with the main company? I have seen this happen when companies are bought out and employees are brought into a company or when employees move to a sub company.
nolesrule
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Re: Terms of employment changing - advice for negotiating higher pay?

Post by nolesrule »

Neuron wrote: Fri Jan 14, 2022 9:54 am If the temp agency offers a 401K after 1 year of employment, why not ask for credit for the past year of employment with the main company? I have seen this happen when companies are bought out and employees are brought into a company or when employees move to a sub company.
That only works because of the relationship of the consecutive employers. A temp agency is typically an independent company where this exception would not apply.
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