Notes
Sharing Best Practices: Pay Practices in the AF USA Network Classification of Workers
a. Teachers in most Alliances Françaises organizations in the USA network
are classified as employees rather than independent contractors (also
called freelancers). This is based on the advice of lawyers across the
network in the past 10 years. Though many factors are involved, the
determination depends mainly on the
amount of control that the employer
exercises. If, for example, teachers are
directed to follow a specific
curriculum, use certain textbooks, hold
classes at a scheduled time and at a
place under the control of the
employer, then those points
demonstrate a high level of control—
the type of control that an employer
exercises over an employee.
b. Individual Alliances have been audited by state agencies (labor,
employment and unemployment departments) in recent years. Those
audits have confirmed the classifications as employees.
c. In one case, a former Alliance worker, who had been classified as an
independent contractor, later filed a petition with the IRS that she should
have been classified as an employee. The IRS agreed and ordered a
reclassification which resulted in fines and payment of back taxes, going
back several years (to the beginning of her employment at the Alliance). It
also triggered a state audit of the organization’s HR records.
d. When workers are classed as employees, payroll taxes are withheld for
FICA (Social Security and Medicare), unemployment, as well as federal,
and state income taxes, as applicable.
e. Payments to independent contractors, in contrast, are done without payroll
tax withholding. The contractors are responsible for paying taxes
themselves on their earned income.
f. For annual tax reporting, employers are required to issue Form W2s to
employees and Form 1099s to Independent Contractors. (Google “W2 due
dates” and “1099 due dates” to make sure you adhere to the annual
deadlines, which are generally in January and February.)
g. In some instances, it is argued that a worker can be classified as an
independent contractor, especially when they operate their own business
simultaneously or when they operate very independently of the on-site
controls at an Alliance.
h. Workers should be designated as either independent contractors or
employees, but not both. One Alliance paid a part-time school manager as
an employee for 10 months of the year. The same person wanted to take
summers off to lead group tours to France, on an independent contractor
basis (managing that program independently for the Alliance). This was
uncovered during an audit and the Alliance was subsequently ordered to
cease the practice.
Notes
i. Alliances are advised to check with local legal and business practice
advisers to verify proper classifications.
Employee Types – Hourly or Salaried a. Teachers who are classified as employees can be paid an hourly rate or a
fixed salary. The Alliances USA network has a mix of both, but hourly
pay for teachers is the most common practice.
b. Salaried positions offer the benefit of regular, predictable monthly
paychecks. Salaried employees generally are offered for more benefits (at
the discretion of the employer).
c. Note that salaried employees can take unpaid time off—a leave of
absence—such as for summer travel to France.
d. Having hourly employees can allow the organization more flexibility to
respond to increases or decreases in demand for labor.
e. Alliances can have a mix of hourly and salaried teachers. In some
organizations, the two types co-exist comfortably. In other Alliances, the
practice led to two “classes” of teachers, and was deemed to be negative
for morale.
f. Note that salaried teachers/staff need not be full-time. Contracts with
salaried teachers can specify work hours of 30 hours per week, for
example. The employee might teach 18 hours per week (a mix of group
classes and private lessons) with the remainder of time spent on specialty
tasks such as curriculum development, qualifying prospects, or overseeing
exams.
Payroll Frequency & Rules a. Some Alliances pay monthly, while others pay every two weeks.
b. Each state has regulations that govern paydays. For example, here are the
rules for one state:
“Employers must establish
and maintain regular
paydays. Paydays may not
be more than 35 days
apart. Employers may not
withhold or delay
paychecks as a form of
discipline. In the case of
an underpayment (mistake
where more is owed to the
employee), the employee
must be paid the undisputed underpaid wages regardless of the cause of
the underpayment. When the underpayment is less than five percent of the
employee’s gross wages, the amount may be paid on the next regular
payday. If the underpayment is more than five percent of the gross, the
amount must be paid to the employee within three business days. In the
case where an employee fails to submit time sheets in a timely manner, it
is still the employer´s responsibility to track hours worked and to pay all
employees on regular paydays.”
c. Bonuses for employees are always handled within the payroll system since
taxes must be assessed on bonus pay, just as they are with standard pay.
d. Check the rules in your state to make sure you are adhering to local
regulations.
Notes
Payroll Scales and Types – for Teachers a. Pay strategies and scales in the Alliances Françaises USA network range
from very simple (flat hourly rates with no variations) to very complicated
(multiple rates of pay).
b. Alliances pay with different scales depending on any mix of factors, the
primary ones being: a) level of experience, and b) level of education
(teachers with Masters or PhDs in FLE may be paid more than ones
without degrees or with other degrees).
c. The cost of living in each region and competitiveness of pay (compared to
other local teaching institutions) are sometimes factors.
d. A few Alliances pay more for teachers who work on Saturdays and
evenings. Some pay different hourly amounts for Skype lessons and
corporate lessons off site, etc.
e. Some Alliances pay a higher rate to teachers in their Children’s programs.
f. Some Alliances pay a standard “active” teaching rate and well as
secondary rates for non-teaching activities (such as attending a meeting,
supervising a testing session, or attending a training session). Note that
some HR lawyers frown upon multiple rates of pay for the same
individual.
g. In most Alliances, teachers are paid the same hourly rate, regardless of the
number of students in a class. The assumption is that some classes will
simply have more students and some will have less. The same teacher
might have 5 students in one class and 10 in another – his/her hourly rate
of pay is the same.
h. A recent survey (in late 2016) showed that average teacher pay across a
sampling of Alliances was $25-27/hour. On the lower end and particularly
for novice teachers, the pay is less (for example, $21).
i. Some markets justify higher-than-average hourly wages, particularly when
demand for qualified teachers is high and supply is low. Note that higher
hourly wages typically translate into higher pricing for clients and lower
operating margins for the organization.
j. In some Alliances, a review and recalibration of pay practices has been
required in order to avoid default.
k. In some markets, there is downward pressure on per-hour client-services
pricing, particularly for private lessons, due to the emergence of native-
speaking online tutors at a client cost of as low as $20/hour.
l. Hourly rates of pay for teachers are in some cases increased with seniority
(length of term of service). Alliances may opt to award periodic or year-
end bonuses rather than setting precedents for firm schedules of escalating
hourly rates. This allows the organization a bit more flexibility to adjust or
react to periods of weakened revenue or low enrollment.
Cancelled Lessons Policies a. One Alliance got an HR lawyer’s advice on lesson cancellations. The
question from the
employer was, “If I
book an hourly teacher
to conduct a lesson,
and then the client
cancels (far enough in
advance that I can
notify the teacher not
to come in), then is it
required to pay the
Notes
teacher?” The lawyer replied that “an employer is not required to pay an
employee for hours not worked.” The Alliance established a policy on
cancellations: 1) When customers cancel by 5pm the night prior to a
lesson, and the teacher is notified, then the customer is not charged and the
teacher does not charge for those hours. 2) If the customer cancels after
5pm the prior night, the customer is charged 50% of the lesson fee (which,
from an administrative perspective, helps cover one of the options
available to the teacher). The teacher then has the options to 1) spend that
hour on administrative tasks and is paid a cancellation rate of $20, or 2)
choose not to come in (and not get paid), or 3) take a different teaching
assignment in that same period, or 4) waive the customer’s delinquent
cancellation fee (on an exceptional basis, usually to promote customer
satisfaction in the case of long-term clients).
Payroll Advances a. If an employee needs a payroll advance (or temporary loan), this may be
accomplished outside of payroll, requiring less manipulation of time
sheets and taxes. Example: Teacher anticipates month-end net pay of $2K
for hours worked. In week 2 or 3 teacher requests payroll advance of $1K
to be able to meet pressing obligation. Employer issues advance/loan
check for $1K in week 3. In week 1 of the new month, after receiving his
standard net pay of $2K (and after deduction of taxes), teacher repays the
$1K advance/loan.
b. Employers are not obligated to make such advances, and HR experts
advise that they be done only on an emergency basis. Written policies
should state, for example, that advances are limited to emergencies and to
two per year. Experts also recommend signing of a contract that specifies
the date of repayment.
c. If an employee quits and has an outstanding loan or advance that has not
been repaid, the employer may not have the right to garnish the final
paycheck (check your state’s rules).
Recording Hours Worked a. Most Alliances have timesheets or use employer-submitted Excel
spreadsheets for the hourly teachers to fill out per time period. These have
basic information including description of task (teaching a group class or a
private lesson), start and stop time, and total hours.
b. Some Alliances use online systems to record and track hours worked.
c. Timesheets are also required in some municipalities for tracking allowable
sick-pay hours, where paid sick-pay hours are legislated for both hourly
and salaried personnel, full-time and part-time.
d. Records of time worked, whether digital or manual, must be preserved in
HR files. (Refer to the HR presentation from October 2016, for length of
time.)
Tracking of Private Lesson Hours a. In manual systems, Client Service-
Delivery Records are maintained
by the main office. These show the
number of prepaid hours for the
private-lessons clients, the
projected delivery schedule for the
service, and the actual delivery of
the hours. These sheets are updated
Notes
by the main office with additional paid hours, as needed. On delivery of
lessons, the teacher and client initial the sheet. In some Alliances, to
prevent loss through unpaid lessons, teachers are not allowed to deliver
teaching hours to a customer whose balance of pre-paid hours is
insufficient to cover a lesson. In that case, the office is called to action to
collect on additional pre-paid hours.
b. This tracking and monitoring of the “fees paid/fees dues” for private
lessons clients is automated in some Alliances. Whether managed digitally
or with paper files, it is important to ensure that the accounts receivables
for private-lessons clients are managed efficiently and with ample
communication between the teacher, office staff, and the client.
Filling Out Form W4s
a. The employer is not responsible if an employee fills out a Form W4
incorrectly, and ends up having insufficient tax withholding. That said,
employers can assist new hires (and particularly persons not familiar with
US taxation systems) to understand the impact of selecting lower
withholding allowances.
b. J1 interns and trainees (including ones employed during their OPT phase)
are responsible for paying income taxes but are exempt from paying social
security taxes; the employer does not have to pay the matching
contribution.
c. Employers should verify such, at the time of hiring, to avoid later issues.
In one Alliance, social security was withheld from OPT teachers’
paychecks and then had to be rectified after petitions were made by
teachers, to the IRS. It’s better to address such complications early, rather
than having to refile and refund taxes (processes that can be costly and
time consuming).
d. New employees should understand the ramifications if they don’t include
the correct number of exemptions on the W-4 form. If they give incorrect
allowances, they might well owe additional taxes later. In some Alliances,
teachers were unable to pay accumulated taxes and had to have their
wages garnished by the IRS. On the other hand, if employees make the
mistake of paying the IRS too much through monthly payroll withholding,
they’ll get that money back in the form of a tax refund once they’ve filed
their annual tax return.
e. W-4 allowances can be changed as needed during the year and over the
course of employment.
Performance Reviews a. Employees—whether hourly or salaried—should have performance
reviews on a regular basis.
b. Ideally, criteria should be specific, measurable and documented. Examples
are student retention rates, feedback from in-class observations, etc.
Notes
Expense Reimbursement a. Alliances should require forms that document the reason for the expense,
the date and attachment of actual receipts.
b. Expense reimbursement must have pre-approval.
c. Keep separate files of all employee or board member reimbursements
(reimbursement is not part of payroll). State audits will examine these
files carefully for completeness to ensure that an expense reimbursement
is not used as a way to compensate persons for hours works.
d. Always check IRS guidelines and rate updates for reimbursing miles
driven. You can pay more than the IRS guidelines, but not less.
Payroll Execution & Analysis a. Many AFs use online, automated payroll through services like Paychex or
ADP.
b. Regardless of the method of pay, the payroll data should be entered in the
AF’s accounting software (such as Quickbooks).
c. When the payroll data are divided into categories of management pay,
teachers’ pay, and taxes, this can be useful data for the Executive Director
and the Board. Year-to-year comparisons can then help easily identify
patterns to question or address, such as a simultaneous trend of rising
teacher payroll costs at the same time as declining program services
revenue (or vice-versa). This is particularly important to monitor, since
personnel costs are generally the largest cost center in Alliance
organizations.
Revision date: Jan. 3, 2017 Disclaimer: This document shares guidance from experts but is not a substitute for legal advice. Always consult local experts for regulations that may apply in your state or region.