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per diem and "standard base rate" in California

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  • per diem and "standard base rate" in California

    Hi all,

    Nice site!

    I looked and looked for a thread on this, so forgive me if I missed it...

    I am currently a job seeker, and today a recruiter told me that California state law prevents them from paying a "base rate" below $60/hr. Yes, BELOW. Sounds too good to be true to the uninitiated, but what it means to those of us in the contracting world - and this is a contract position, at a location greater than 50 miles from my permanent residence - is less take home after all is said and done.

    The "pay rate" is $75/hr, with per diem at $15/hr, and "base rate" at $60/hr.

    I am arguing for the maximum per diem allowable, as given by the GSA... $33/hr, and a "base rate" of $42/hr, which gives me a greater take home than a 15/60 split.

    I couldn't find any state law indicating a "standard rate" that cannot be gone below. In fact I just finished a job in the same county as the prospective job, that paid maximum per diem. And this has been the case for the total (7) years I have been contracting.

    The recruiter of course could not provide a citation for the law supporting his case. I was going to ask him why bother to ask me what rate I am looking for, when he is going to offer something below it.

    Anyway,

    swengr3

  • #2
    1. No such law as stated. May I ask if you have something to do with computers? If you qualify for the computer professional exception and you are paid hourly, then the federal minimum hourly rate is $27.63/hr and the higher California minimum hourly rate is currently $36/hr.

    2. "Per Diem" is one of those phrases that mean different things to different people. If you are talking about "Per Diem" in the non-taxable "free money" standpoint, then according to IRS there are some very specific rules that have to occur for this to happen. You might want to read IRS pubs 463 and 1542, because many people who talk about Per Diem have a different understanding of the rules then IRS does. Especially if some one has told you that calling a payment "Per Diem" somehow makes taxes go away. IRS is not a big fan of the "magic words" argument.
    "Reality is that which, when you stop believing in it, doesn't go away".
    Philip K. **** (1928-1982)

    Comment


    • #3
      I am a software engineer

      So maybe this qualifies me as a "computer professional", or maybe another category with a base rate of $60.

      Where are these minimum wage categorizations kept? Perhaps there is a categorization for software engineer.

      swengr3

      Comment


      • #4
        The only occupation hourly rate that I am familar with is the one for certain computer professionals, and that is the only occupation specific one. The following webpointer will take you to the general area. The hard text will mention a rate of $41/hr (effective September 2000) but a little further down is a pointer to the current rate. That rate is subject to change annually.

        http://www.dir.ca.gov/dlse/Glossary....ftware%20field

        Too my knowledge there is no $60/hr rate anywhere.

        The generic minimum wage rate (current $8/hr) can be found in the CA Wage Orders (industry specific regulations).
        http://www.dir.ca.gov/iwc/WageOrderIndustries.htm
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

        Comment


        • #5
          So a per diem less than the maximum?

          So, if the recruiter was making it up about the $60/hr "standard rate", then he's getting away with offering a per diem rate that is less than the maximum rate. (1) Is this legal? (2) Why would he do that?

          In any case, the recruiter has indicated that the position is no longer available, and wishes me good luck, and will keep in touch.

          Anyway,

          swengr3

          Comment


          • #6
            I have no idea why anyone ever does anything, much less recruiters. I can say that I have no familarity with the law around recruiters who lie to clients. If they gave you something in writing, you might want to show it to a local attorney. It is not impossible for a verbal represenation to rise to the level of an enforcable contract, but it is also not very likely.

            I can say that IRS has the last word on the taxability of Per Diem and that word is contained in the two IRS publications I previously cited, not in the mouths of recruiters (or employers).

            Past that CA rules can be found in the California Labor Code, the Wage Orders, Opinion Letters, and the CA-DLSE manual. I would not regard a recruiter as one of my top hundred thousand sources of places to find out about CA law. A recruiter's opinion on CA law arguably carries no more weight then a cabbie or a hot dog vendor.
            "Reality is that which, when you stop believing in it, doesn't go away".
            Philip K. **** (1928-1982)

            Comment


            • #7
              The closest thing and SB929

              Yes, the $60/hr rate is unfounded. The closest thing is the 2007 rate of $49.77/hr, but the new rate was reset to $36/hr for 2008.

              On the other hand, I suppose it is legal for a recruiter/job shop to "request" a lower per diem rate than the maximum. Then it would be up to the job seeker to sign or not sign the contract agreement.

              Anyway, thanks for all the help!

              swengr3

              Comment


              • #8
                And that hourly rate only applies if you are an exempt computer professional who is paid on an hourly basis. If you are paid on a salaried basis (and exempt), the minimum weekly salary is $640 (twice the minimum wage * 40 hours).

                You keep talking "per diem". Are you talking about a daily compensation rate?
                I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

                Comment


                • #9
                  (per diem x 7) / 40 = portion of hourly rate that is non-taxable

                  Yes, per diem as referred to by the GSA website www.gsa.com.

                  The contract agreement with the job shop usually almost always, has the "full rate" given for overtime computations, which is why I can't understand why a recruiter would try to mess with the per diem / rate split.

                  One could argue that SB929, in lowering the minimum wage for computer professionals, actually RAISED the net take home for computer professionals (if my assumption is right that it is indeed legal (for the recruiter) to mess with the per diem; if my assumption is wrong, then I'm not sure who wins between per diem, minimum wage, and the offer in the contract letter).

                  My inclination is that companies probably can't offer a rate below the minimum wage + max per diem rate. Unless they offer something like a straight rate, without per diem, and let you make up the difference during tax filing by keeping all receipts or something - something I haven't had to do, especially since I haven't been much of a big spender these days.

                  swengr3
                  Last edited by swengr3; 09-30-2008, 01:03 PM.

                  Comment


                  • #10
                    "Per Diem", when used in the regular sense, is merely an alternative way of paying business travel expenses. There is nothing an employer can do to reclassify wages as nontaxable income. Wages are wages. Business expenses are not income to the employee if under an accountable plan, as defined by the IRS.

                    Is this a federal government job? Would you travel as part of your job?

                    Besides, $60 per hour? You think the the federal government is going to pay that in this economy? That's over $10K per month.
                    Last edited by Pattymd; 09-29-2008, 12:33 AM.
                    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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                    • #11
                      regardless of why

                      Yes, the purpose of per diem is to offset or account for business expenses, related to travel, food, lodging etc. However, in the contractor world, all that needs to be satisfied is the job location be greater than 50 miles from contractor's permanent residence. Which is why many contractors have permanent residences in the middle states, so that relocation is minimized (ie, relocation "distance" is minimized, on average, but the possibility for meeting the per diem requirements is maximized).

                      Again, I have never experienced a case where a contractor got anything less than the maximum per diem. On the contrary, due to the variable length - and often 6 months to a year in length - of the contracts, contractors usually get an attractive hourly rate. The argument is, that the relocation costs, along with the short term arrangements, warrants the higher pay rate. Sometimes a job falls through, and it is up to the contractor to pick himself off the ground and get to the next "opportunity". All these costs figure in, as well as medical expenses and other benefits that contractors - and increasingly fulltime employees as well - don't get.

                      I am not a federal employee, but a contractor in the private sector.

                      swengr3
                      Last edited by swengr3; 09-29-2008, 01:21 PM.

                      Comment


                      • #12
                        IT and Computer Pay

                        Originally posted by swengr3 View Post
                        So maybe this qualifies me as a "computer professional", or maybe another category with a base rate of $60.

                        Where are these minimum wage categorizations kept? Perhaps there is a categorization for software engineer.

                        swengr3
                        do you write code? if so here is a helpful chart


                        Salary Required for Hours in Work Week:

                        Year
                        Hourly
                        @ 40 hours
                        @ 50 hours
                        @ 60 hours
                        @ 70 hours
                        @ 80 hours

                        2008
                        $36.00
                        $74,880
                        $93,600
                        $112,320
                        $131,040
                        $149,760

                        2007
                        $49.77
                        $103,522
                        $129,402
                        $155,282
                        $181,163
                        $207,044

                        2006
                        $47.81
                        $99,445
                        $124,306
                        $149,168
                        $174,029
                        $198,890

                        2005
                        $45.84
                        $95,348
                        $119,184
                        $143,021
                        $166,858
                        $190,694

                        2004
                        $44.63
                        $92,830
                        $116,038
                        $139,245
                        $162,453
                        $186,661

                        2003
                        $43.58
                        $90,646
                        $113,308
                        $135,970
                        $158,631
                        $181,239

                        2002
                        $42.64
                        $88,691
                        $110,864
                        $133,037
                        $155,210
                        $177,382

                        My firm has handled many IT and Computer class action cases and we have found that the majority of employers are liable for overtime pay, interest, penalties etc.
                        Walter

                        www.Californialaborlaw.info
                        "California Wage and Hour Class Action Attorneys"

                        Disclaimer: The above correspondence does not constitute legal advice nor establish an attorney-client relationship. You should seek the advice of independent legal counsel before relying upon, acting upon or not acting upon any information contained in this correspondence.

                        Comment


                        • #13
                          perfect example

                          Looks like quite a roll back for 2008, beyond 2001 even.

                          Geez!

                          swengr3 (sw tester)

                          Comment


                          • #14
                            Late, but a necessary correction

                            I think there's a running misconception about a "minimum wage" here. There is no minimum wage for computer programmers. You are free to work for $10 an hour if you want.

                            The numbers being discussed are a minimum required wage or salary at which something called the California Computer Professionals Exemption takes effect. This exemption releases the employer from paying you overtime pay for hours worked past 40 hours per week.

                            If you earn less than that wage, and are forced to work more than 40 hours a week, you are owed overtime pay.

                            If you earn more than that wage, and are forced to work more than 40 hours a week, you are not owed overtime pay.

                            I'm studying the law and putting up notes on my website - see profile.

                            Comment


                            • #15
                              jkawakami - please do not reply to old threads. This thread is 2008. Thanks.
                              Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around. Leo Buscaglia

                              Live in peace with animals. Animals bring love to our hearts and warmth to our souls.

                              Comment

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