Client wants to bill me

Question

I work for a small graphic design company. Very small. It's just the owner and myself. I'm technically an independent contractor, although I act more as an employee (I know this is already not a good arrangement, but go along with me for now).

The owner will find clients and sign them on, after which he pays me an hourly rate to essentially do everything else, from start to finish.

Recently he has stated that he will begin billing me for any time that he spends on the projects "finding things wrong" and "fixing client relationships etc." when there is something that he deems a mistake.

This doesn't sound right to me. It seems to me that it is his job as the sole proprietor to have an active role in the process; that his clients are paying him to do a job and now he wants me to also pay him to do that same job. I could see if I was making a set amount on a project and I really dropped the ball, but that's not the case.

And I could also see if these were my clients and I was giving him a finder's fee, but that is also not the case. His company receives all the credit. He negotiates the prices with the clients. And he is paid directly by them, only after which does he write me a check for my work. I have no idea what he's earning off of these projects in which I am essentially doing 100% of the fulfillment, but on top of that, he now wants to bill me whenever he feels the need to work on them.

It obviously doesn't sit well with me that he would suddenly want to bill me for work he's doing for his own clients.

I'm having trouble making sense of this. Is there any precedent for what he's proposing? Is my instinct correct that this isn't okay. And if so, how do I explain this to him nicely without making him angry, while backing up my position with relevant information?

— Ladnav

PS: Let me know if further clarification is needed on anything. I'm still a little rattled by this and trying to wrap my head around it.

Answer 1

Despite any legal employment issues (it sounds like the situation may be complicated and I have no idea where you are, so It's impossible to comment on that), if you aren't happy with the arrangement then walk away.

Since you're working as part of a two man team (regardless of how one sided that team is, or whether you're working with or for the other party) your relationship with the other party is of paramount importance. If your working relationship isn't built on trust and understanding then it isn't going to be a good one. You both need to be entirely clear on the arrangement and work in each others interest.

I don't know the ins and outs of the situation so I can't say much with any certainty but from your tone it sounds like this isn't a healthy working relationship and my advice would be to walk away. If you're not in a situation where you can simply walk away now (financial restrictions, contractual reasons etc.) I would continue working, negotiate this situation the best you can without causing any serious disagreements, and look for alternative working arrangements (whether that is regular employment with an agency or a larger company or simply setting up on your own), and give any relevant notice as soon as you have alternative arrangements.

To briefly comment on the situation itself: it's not an abnormal situation (I know people who work with similar arrangements) but it isn't a good or healthy way to work if you aren't happy with it and completely clear on the arrangement (e.g. have solid contracts in place). The long and short of it is, if you're happy with it, carry on—If you aren't, walk away.

Answer 2

I'm having trouble making sense of this. Is there any precedent for what he's proposing? Is my instinct correct that this isn't okay. And if so, how do I explain this to him nicely without making him angry, while backing up my position with relevant information?

First instinct that comes to mind is to ask you what your contract says. If you do not want to agree to his terms you could go elsewhere based on what you've said which I wouldn't have accepted the job though.

However, as this is one sided this reminds me very much of how a salesman gets paid. I've known several that get a flat hourly rate with the expediency of work to be performed and at the end of a quarter a payout is done and if you under performed you would technically be responsible to pay it back. I could only see this being accurate if you were paid in advance for work that you didn't complete and for legal reasons he could be doing a chargeback.

As you've stated, this is just you and the owner and if you do want to risk working for someone of this nature I would encourage you to look at all work with a fine tooth comb and in writing but based on your current situation I do not know how you could operate and overtime your designs will be effected.

In regards to explaining/negotiationing it to him, I don't really think you can based on his request foremost but if you do I would look at your current pay and the legal terms stated in your region. Based on your question the only route to prevent this from happening is to look at local laws regarding pay like our Department of Labor. If you do live in the US, contact the DOL.

Also, I do not understand how you could be techincally a contractor but on hourly. Either you're declared as hourly to his company or a contractor, he has to file something at the end of the year or quarterly. In the US you would be issue, if I recall, a Form 1040. How you're declared will also be questioned by the DOL and how you should proceed but if you're not a US citizen look at your local tax laws and codes if you want to challenge this. If you do plan this route, I'd ask is it really worth it? If you don't have a non-compete I'd look for other work as to me I can see this as somewhat unethical and it almost sounds like this is a start-up.

Answer 3

If there is nothing in writing (signed by both parties) and no one broke any laws (damaged property), then you owe nothing. Your design services are just that; a service. If someone is not happy with your service, then that someone should stop hiring you.

But if you two are stuck with each other and you need the income under this condition (reimburse for short-comings), then you should simply triple your rate in anticipation of future loses.

Two can play at this game.