question about hourly/salary type stuff (1 Viewer)

[Philip_G]

maybe there are some HR people in here too..

I got a job offer today, it's an hourly position, but they made the offer in salary form, XX,XXX a year.


Now, my current job they say my salary is XX,XXX but my actual in the envelope before taxes pay is XX,XXX minus about 5 grand which they account for in taxes paid on my behalf, insurance etc...

so I forgot to ask the guy today what my actual hourly wage is, because if he calculates it as my current employer does, my pay goes up about 400 a month, but my cost of living approx. 700/month, not such a hot deal.

my old man swears up and down he's never had a job pitch him a salary and then find out the "in the envelope" pay as he puts it is less.

so, is this common or not?

 

[Joel Mack]

In my experience, Salary is always a "before taxes and other deductions" amount.

 

[Philip_G]

it's not even really deductions, here's how my current/ex employer breaks it down. I'll post the numbers because well.. how in god's name can it be considered bragging when you make as little as I do... the job is history anywho so it's old news embarassing really :b

WAGES.. XX,800.00
medical.. $2169
dental $326
vision $76
life ins $57
disability $120
401k match estimate 4$16
taxes paid by assmunch employer..
soc. sec. $1289
medicare $301
unemployment $434

.......................
salary $26,004.72



so see what I mean, all this BS is rolled into my "offered salary" even though my real pay is much, much less.

so is this normal?
I wonder if my new offer includes the same BS in the offer or if it's straight pre tax/deduction pay..
I can understand the "salary" figure above being important as it's my real cost to the company, but I don't give two craps about it, just what's in my pocket. Like I said, the old man (who has been in management hiring/firing forever) swears he's never seen it done this way.. and the company I was offered the position at is pretty upstanding..

 

[Steve Schaffer]

Whether salary or hourly wages, the amount offered by the employer is always pre-taxes (both income and Social Security) and other deductions like health care, etc. Actual take-home varies widely according to how many exemptions you claim on your income taxes, how many dependents you have on your health care policy, etc.

For this reason it's difficult to impossible for the employer to tell you upfront what your actual take-home pay will be.

So if your take-home is $400 more but your cost of living is going to be $700 more due to housing costs in the new area, you're looking at a net loss of $300 a month.

Typically, if one is paid on an hourly basis, one must by law be paid overtime when required to work more than the customary number of hours a day or week.

Salaried employees are not required to be paid overtime, so they can end up working 12 hours a day for 8 hours pay.

Then you have some occupations like auto mechanics and plumbers that are paid flatrate--a certain number of "hours" are paid for any given individual job procedure (i.e. changing a timing belt on a Toyota Camry 4cyl "pays" 3.5 hours at the dealership where I work). If the job is done in less than the flatrate time, extra money can be made. It's possible to be paid 12 hours pay for 8 hours of actual work. The downside is that sometimes a job can take longer than the allotted time so one can end up working 8 hours and only getting paid for 5 or 6 if unforseen problems with rusted together parts or stripped out nuts and bolts occur.

 

[Philip_G]

take a peek at my example steve, I think my first post wasn't quite clear, my fault for not explaining clearly. I have no problems with the actual tax and insurance deductions, but I do have a small issue with adding in the 401k MATCH and the part of my insurance that the EMPLOYER pays into my "salary"



The part you describe is rolled into wages, 52 weeks times 40 hours time the pay rate, plus vacation time. Subtract my taxes, medicare and soc. sec and I get the in my pocket pay, no problems with that. but the salry includes that plus the employers expenses.

am I clarifying, or confusicating more?

 

[Steve Schaffer]

Sorry, now I understand.

This sounds deceptive to me, including benefits as part of the quoted salary.

I see nothing wrong with advertising the base salary and then listing the value of the benefits separately, but lumping them together so you don't know what your actual salary is doesn't seem right. If they can give you a breakdown of what is actual salary and what is benefits, that would be more acceptable.

 

[Leo Hinze]

I get what you're saying, Philip. No place I have ever worked or interviewed quoted the salary with that other crap. Salary is salary, period. They might say salary plus benefits, which often includes some other things, like employer's contribution to medical, 401k, etc, but salary should be salary, period.

I'm not sure what your employment situation is, but I would never work for an employer who touts their paying of their legally required employee taxes for you as a benefit to me. Every employer is required by law to essentially match what you pay in Social Security (another joke) and medicaid taxes, as well as an additional unemployment tax.

That being said, I do know people who have worked as 'independent contractors' who received a higher hourly rate, but were required to pay all of the extra taxed themselves, so the pay essentially balanced out.

The standard way to convert from a yearly salary to an hourly salary is to simply divide the yearly salary by 2080 (52 weeks/year, @ 40 hours/week).

 

[Philip_G]

Ok, glad I could clear it up. So it's not the "common" way of doing things. Chances are the new employer is more honest and up front with their offer. I ask here because the HR guy I have been talking to is now on vacation and I'm worried about it, he won't be back until next week when I can find a definite answer. It is difference between a significant raise and an incredible raise, and the difference between being able to live there comfortable and being ghetto poor

 

[Jason_Els]

A net loss of $300 is dreadful. I would highly suggest talking to the HR people and explain your living expenses in detail. Doing so makes it very hard for them to say know since it doesn't seem you're pulling a number from thin air. If you are truly going to be waged, versus salaried, be sure they tell you exactly how much an hour you will earn. That's how it works and the least you should expect.

 

[Erik_C]

I'm salaried. Before I bought my house (and got a huge ass mortgage interest decuction of $1500/month), my paycheck was just over half my gross salary. That sucked. Of course, the alternative would be to make less so I get fewer taxes taken out, but that's crazy talk.
When I was hired, I was quoted my gross (before taxes and other expenses) monthly pay. I was not told what my paycheck would be every two weeks.
Welcome to the real world of taxes, taxes, and more taxes.
-Erik

 

[Eric_L]

Ya, but look at all the wonderful benefits we get for paying income tax. Like... um... er,, gee.

 

[Todd Hochard]

The standard way to convert from a yearly salary to an hourly salary is to simply divide the yearly salary by 2080 (52 weeks/year, @ 40 hours/week).

This is how my company does it.

 

[Philip_G]

if they use the 2080 rule I'm golden, that means i get like a 15k per year raise, but the HR guy is out of the office until wednesday, so I guess I stay in suspense until then. Did I mention it's in denver?

 

[Keith Mickunas]

Philip, what do you report for your taxes? That's what is important. Typically the highest number on your W2 should be what your salary is, or close to it.

From what your saying I believe that the amount you call wages is what most people call salary. For instance, my boss pays me a set salary per year, from that he subtracts my Fed tax, Soc, Medicare, and 401k in each paycheck. He also contributes matching amounts to Soc and Medicare and he pays for my insurance, but that is completely separate from my salary. So at the end of the year, one of the boxes on my W2 actually states my agreed upon salary. If you were to take everything I bring home plus everything I pay, plus the parts he pays, it would come out substantially more than my salary.

 

[Philip_G]

right keith, that is the meat of what I'm asking. My current employer calls that bottom line figure my "salary" when I feel what they call "wages" is really my salary, as it is my pre tax and deductions compensation.

I was curious if other places do this, and the overwhelming response here seems to be NO

 

[Scott Merryfield]

As others have stated, your salary should be the amount of money paid to you before deductions that you are responsible for paying -- Social Security/Medicare, federal/state/local income tax, your portion of insurance benefits, 401K contribution, etc. It should not include costs that your employer is paying on your behalf -- their Social Security/Medicare match, their 401K contribution match, their portion of insurance benefits, etc.

Many employers now offer flexible benefits packages, where they give you a certain allotment for different insurance coverages, and you can elect to take more or less coverage, which means you will cover the additional costs or receive the savings in your paycheck.

With all the variables in tax withholdings, amount of employee 401K contribution, and flexible benefit spending it would be impossible for a prospective employer to tell you what your take home pay will be.

 

[Keith Mickunas]

Philip, if your current employer pitched you the job the way you're describing it, I think that it might be considered fraud. IANAL, but that just doesn't sound right to me. Its like they're trying to make you aware how much it costs them to employ you and you should be grateful to them. I don't know what the legal definitions of wages and salary are, but when someone says they are offering you a job at X salary, that's how much that should be reported on your W2s (excluding overtime, bonuses, etc.). Salary should be the same as gross income, if your gross is less, you're being screwed.

My boss includes a spreadsheet each month with my paycheck that also lists his contributions to medicare and soc. sec. I don't know if he does this just so I have a record that he's making these contributions, or if he's just highlighting the fact that it costs him more to pay me than just my salary. But he's never once tried to pitch that total as my salary.

Hopefully an accountant or tax person will se this and chime in.

 

[MarkHastings]

As long as this is the way the company pitched it, how can it be wrong?

It's obvious that they are paying you the extra $300/month (or whatever it is), and then taking it away from you for insurance, but as long as you know that beforehand, there should be no problem. If you don't like it, don't work there.

What would be an interesting thing to find out, is if you decline the insurance, would that extra cash still be in your salary? It should.

Most companies give you insurance as a benefit and if you don't take the insurance, you lose out on the money. This situation sounds like it might be better. Imagine getting PAID for declining insurance!!!!

 

[Philip_G]

IANAL. LoL

 

[Malcolm R]

Exactly. Also used to justify smaller pay increases since you're also receiving all this other "compensation."