Long and often irregular hours are a fact of professional life for most consultants. Helping a client meet a deadline or bringing up a network over the weekend while employees are out of the office come with the territory.
Although salaried employees are often not paid extra for overtime, companies may grant them “comp time” or other benefits in exchange. Hourly employees almost always receive overtime pay. But as an independent consultant, you’re not any kind of employee. In this article, I’ll discuss when and why an independent consultant might consider charging a client for overtime or weekend hours.
Is it appropriate to charge overtime?
Billing a client for overtime hours can be a delicate issue. Many companies don’t pay their own employees for overtime, so they may question why you should be any different. As a consultant running a one-person business, I’ve worked a lot of overtime. In hindsight, sometimes it would have been inappropriate to charge extra, while in other situations, I’ve cursed myself for not doing so. Here’s a look at both sides of my story.
First, I’ll confess that to date, I’ve never been paid extra for working overtime or weekend hours even though I've often done so. Sometimes the additional hours are a result of juggling work for multiple clients, and I don't expect any one client to pay more if I’ve chosen to do this. That said, consider this: What if a client is begging you to take on a project and knows full well that you’re very busy? In such a case, you might simply charge a higher flat rate for an urgent job that will take away your evenings and/or weekends.
In my experience, work for one client has often ended up as "overtime," sometimes for weeks on end. But most of the time, I consider this part of the price of running my own business and wanting to deliver for a client. I worked so much overtime in my early days as a consultant in part because I hadn’t yet learned to say no to a client. Now, I try to balance customer satisfaction with losing my personal life for no extra reward. I would never charge a client extra the first time I worked 41 hours in a week. But I would increase my rate if I knew going into the project that a significant amount of work would have to be done outside business hours on a regular basis.
Here’s a recent situation in which I found myself wishing I’d negotiated extra compensation: I was writing process documentation for a manufacturing company, so I had to be there when certain processes ran. What I didn’t know is that certain processes happen only at certain times. Believe me, every time I drove to the plant at 3:30 A.M. or put on a hairnet to observe the Friday night machine cleanouts, I was cursing myself for not setting regular business hours, outside of which I would be paid extra.
Negotiating overtime pay
If you want to charge for overtime, you’ll have to negotiate it. If this is an important issue to you, make it a habit to ask potential clients the following questions:
- Do you expect you will often need my services for more than 45 hours a week?
- Do you anticipate any work spilling over into the weekends? How often?
- Are there aspects of this project that can be done only at night or on weekends?
If it becomes clear that you’re facing a mountain of work, you can approach it a couple of ways:
- You could increase your regular rate on this project, without charging specifically for “overtime.”
- You could charge an extra percentage on top of your regular hourly rate for hours worked either outside regular business hours or for all hours worked over 45 in one week.
I believe consultants should be willing to go the extra mile, and that’s why I would set the overtime threshold at 45 hours instead of 40. (Of course, if I actually bill 40 hours a week, it means I’ve worked at least 45 once I account for the overhead involved in running my own business, but that’s part of working for yourself.)
How much should I charge?
Once you make the decision to bill for your extra time, the next question is how much to charge. I recommend that you not even consider the time-and-a-half standard used for hourly employees.
Many clients perceive consultants as charging exorbitant rates to begin with. They may not truly comprehend that we pay all our own benefits and payroll taxes, don’t get vacation or sick pay, and have significant periods of downtime during which our hourly rate is zero. So, if you slap on a 50 percent charge for overtime, you might blow the deal.
As a guideline, anything less than 10 percent wouldn’t be worth negotiating for, while anything more than 25 percent may seem like highway robbery to your client.
Talk to other consultants in your field, if possible, to gauge what percentage would be acceptable. You may want to try Internet chat rooms or mailing lists, as consultants in your market are likely to be tight-lipped when it comes to money.
Can I charge for overtime even after the contract is signed?
If you didn’t negotiate provisions for extra work in your contract and then find yourself toiling away every evening and weekend, what can you do? One thing you should never do is raise your rate once the contract is signed, no matter how many hours the client throws at you.
If you did adequate research during the specification phase but still have an unacceptable workload, compensation is the least of your problems. It means the project has gotten wildly out of scope or the deadlines have shifted dramatically. You need to talk with the client and try to adjust expectations and/or the workload instead of asking for more money. You may need to refer to the scope of work set forth in the contract—one more reason to make sure that all the details are spelled out up front.
If you have to renegotiate your contract, you could decide at that point to charge for extra hours. However, you’re probably better off learning your lesson and saving your overtime charges for the next client or at least the next project. Unless the client blatantly misled you about the nature of the project, the client is likely to perceive new charges as moneygrubbing on your part.
If you choose not to charge overtime, point that out to clients
Here’s a final word: If you choose not to charge extra for overtime or weekend hours, make that fact a selling point. When you present your rate to the client, make sure to also note that the rate will not vary even if a project requires you to work more than 40 hours a week or on weekends. It’s another way to reassure clients of costs, and if you aren’t benefiting from extra pay, you should at least reap client satisfaction from your flat-rate pricing.
Meredith Little runs InfoDoc Solutions, a documentation consulting business she started in 1998. Based in Colorado, the company provides procedural documentation, knowledge management expertise, and solutions such as user manuals and online help to IT companies nationwide.Do you work lots of nights and weekends for your clients? Are you compensated for those extra hours? How do you bill them for overtime? Post a comment below or send us a note.