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Our organization will be hiring contractors to shore up a project for at least 3 and possibly 6 months or longer.

Some of these contractors will be local and some will be remote, flying in/out on a regular schedule.

This is new ground for us, and we are flummoxed about compensation for local vs. remote contractors.

Our baseline assumptions are that:

  • All contractors will work 40 hours/week.
  • Travel expense (transportation, lodging, meals) are reimbursed.
  • Remote contractors will spend an average 12 hours round-trip commute each week (time over-and-above that of local contractors).
  • In-transit "work" isn't feasible.

Here are the questions:

  • Is extra compensation (for travel burden) due in some form or not?
  • Why or why not?
  • If yes, then at what rate or by what method?

We want to do the right thing for the organization and for the people.

 Thank you in advance for your collective wisdom.

 

 

 

 

 

 

 

 

stephenbooth_uk's picture

I've worked with contractors quite often and have never heard of them being compensated for travel time, often not even travel expenses, from home to the job (travel as part of the job, e.g. to meetings, is often compensated).  There seems to be a presumption that the contractor will factor that into the day rate/fixed price they quote.  Accommodation and related expenses are usually compensated.

This is in the UK, practices elsewhere may differ.

Stephen 

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RoMaJo's picture

 

These are hourly contractors, where the range is $40-$50 an hour depending on skill set.

We have several people who are former road warriors who raised the red flag based on their own unhappy experiences at another company.  In their case, they were W-2 "contractor" trainers. (I assume anyone reading this will recognize the air-quotes and know what they mean.)

All contractors were paid on the same, internally published pay schedule at the same day rates whether they taught locally or flew to client sites.

Most of the training opp's were local to the company's headquarters, and so of course the company used the local trainers to keep down their costs and client costs.

After factoring in their travel, the traveling trainers earnings were about 25% less than the local contractors. Something that, over time, built a lot of resentment.

Though the problem was never solved per se, the company's management alleviated the sense of unfairness with a travel-time stipend based on the number of air miles from point A to point B, one way (not round trip). The average stipend was $100, and the rare maximum was $200.

Using our hourly example, it might have looked like this:

 $2,000 = $50 * 40 (base pay with no travel)
<$1,540> (base pay after factoring in 12 hrs travel round trip; i.e., $38.50 * 52)
--------------
$    460 ("shortfall" for travelers without stipend)
$    360 ("shortfall" for travelers with typical $100 stipend)

The travelers were still earning less on a week-to-week basis but the pain was lessened somewhat.

Our situation is similar in that the contractors we are recruiting already know the pay schedule for work. We are preparing to make offers.

Is it a true potential problem that we should be ready to pre-empt in the offer stage? Or should we wait to see if it crops up and manage it after work begins? Or is it a red herring?

Can anyone relate?

 

 

 

Mark's picture

Travel time compensation is not "due."

Why?  Because travel time is like a commute, and most orgs don't compensate for that.

That said, there's no rule against doing it, and it might be reasonable. 

I generally wouldn't recommend a blanket policy to do so (unless we're talking 5%, say) simply because if it's codified, then it WILL cause the elimination of jobs in the event of a downturn.  (You might think a firm would simply get rid of the 5%, but that's not what they do, sorry).

 

RoMaJo's picture

From StephenBooth_UK

" I've worked with contractors quite often and have never heard of them being compensated for travel time, often not even travel expenses, from home to the job (travel as part of the job, e.g. to meetings, is often compensated).  There seems to be a presumption that the contractor will factor that into the day rate/fixed price they quote.  Accommodation and related expenses are usually compensated."

In the USA, it's not uncommon to compensate travel expenses (airfare, mileage, meals, lodging) for all travel days, including arrival and departure days. Some companies have policies that certain expenses are paid only after a commute exceeds x-number of road miles. And many companies just follow the federal government guidelines, which (for example), typically pays 75% of a meal per diem on your arrival day and 100% on subsequent days.

As Mr. Horstman points out, it's not so common to pay for actual travel time as a way to "even up" a disparity such as I described in my original post.

And the reason I'm posting today is that  an associate sent me a recent job posting that offers additional compensation for travelers. The formula was an hourly rate up to a maximum number of hours for travel time.

Compared to my earlier example where additional compensation was based on air miles flown one way, the $ x hours also allows compensation for people who drive or take trains or buses on long commutes.

I also think Mr. Horstman's advice to not codify something like this is spot on.

 

RoMaJo

gpeden's picture

When we contract (or do work for hire) travel reimbursement is typically detailed in the SOW. 

Thanks,

George

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