Is my company allowed to set my billable rate without my consent?

UPDATED: Apr 12, 2011

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Is my company allowed to set my billable rate without my consent?

I work for a consulting firm. I am salaried and get paid $43,500 annually. My billable rate was set by my company and is $125/hour to the client, of which I only receive about 16% ($20/hour). My company requires employees to be 100% billable and also encourages everyone to work overtime, for which my rate goes up to 125/hour. We don’t get paid for overtime; so if I work overtime my billable rate is still $125/hour but I receive 0%. Is my company allowed to set my billable rate without my consent? Is this misleading the client regarding what the charges are actually for? Could this be fraudulent?

Asked on April 12, 2011 under Employment Labor Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

1) Of course the company can set your billable rate--this is done all the time. Companies make money by billing their staff out for more than their staff cost them in salary and benefit. A company can charge it's clients what it wants (and the market will bear) and can offer it's employees whatever compensation it wants to, and the two don't have to have any relationship to each other. Your "consent" is irrelevant.

2) There is no fraud in not explaining to a client what ever element of the company's cost structure is; see point 1, above. Companies don't have to explain their costs, profit margins, etc.

3) If you want control over your billings, then you should consider going out on your own--going freelance, setting up your own consulting business, etc. Good luck if you do this--personally, I find having my own practice and business (I have two businesses plus my legal practice) very satisfying.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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