Wednesday, March 27, 2013

What "In Arrears" Means and Other Payroll Need-To-Knows!

When and how we get paid is a very important part of our employment agreement with our new employer.  Understanding the payroll and expense reimbursement process prior to hire is also extremely important.  Payroll is an area where surprises are typically unwelcomed!

Unfortunately some consultants have found themselves working for companies that do not reimburse travel expenses in a timely fashion - or sometimes they even find themselves being owed money for travel expenses and hours worked - long after the project has ended.

While it is standard practice that most company payroll occurs every other Friday, some companies pay weekly and yet others pay bi-monthly or monthly. 
The date you are paid (and reimbursed) could depend on your employment agreement.  1099 or Corp to Corp contractors may be paid on a different schedule than W2 hourly and salaried employees because they are considered a separate entity and invoicing has to occur.  For more information on employment models and how they differ see this post:

With some employers, you may find your first paycheck and expense check will be "In Arrears".  In Arrears means that you will work through your first pay period without a check and will receive payment the next pay period for the first pay period you worked.  For instance: you accept an engagement with XYZ Company and start on Monday, April 1st.  XYZ Company pays on the 15th and last day of each month.  On April 15th you will not be paid, you WILL receive your first pay on the 30th of the month for the work you completed from the 1st thru the 15th.  On May 15th you will receive payment for the work you completed from April 16th thru the 30th.  (and so on).  If you complete your engagement with XYZ Company on November 15th, you will receive your last paycheck on November 30th for the work you completed from November 1st - 15th.

Your pay schedule and estimated income will be provided to you in writing by your new employer during the on-boarding process, however this information should have been expressed to you during the interview process as well.  There should never be any surprises when it comes to your financial arrangements.

Whether you are accepting a contract engagement or permanent employment, it is important to understand your pay schedule, particularly if you are going to experience frequent travel and be expected to cover your expenses up front.  Four weeks can be a long time to carry your own travel expenses, fortunately most companies are willing to provide assistance when necessary.
By asking the right questions about payroll and expense reimbursement during the interview process and again during the offer stage you should be able to avoid any unexpected confusion or financial burden with your employer.

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  1. Via Linkedin: "Enjoy reading your blog, very informative" ~Bridgette, RN

    - Thank you!!

  2. Today I noticed a post in a Linkedin Healthcare IT Industry related Group that was posted by a very disappointed and disillusioned traveling consultant. She was dismayed by a recent experience with a large consulting firm that had offered to pay her a higher hourly rate in lieu of paying travel expenses. They convinced her that the extra $15/hr (or so) above her normal rate she would be receiving would be substantial enough to cover her travel costs. When the project was suddenly canceled early in the engagement she found herself spending most of the income she earned on her travel costs. In this situation I caution to ALWAYS do the math FIRST. Find out what flights are going to cost in advance, particularly flights you may need to book in a short window of time. If the extra $$ you will be making doesn't equate to at least $1500 a week (which is industry standard for a weekly travel per diem) you may want to pass on that opportunity.