How much do I pay my employees?

This is a great question! I've under paid and over paid those who work with me because I didn't know the value of their services any more than I really knew the value of mine. Years of experience have taught me several things about paying employees: 1) It's important to charge enough for your services in order to pay someone else to help you. 2)Remember that with employees you will most likely need to pay them even when the work flow slows down. 3) Figure out if an employee arrangementworks out better for you than an independent contractor. In California, if not elsewhere, there is a definite distinction between employee and I.C. and technically some employer taxes are due on both (I.C.: Workers Comp). 4) Don't pay more than you can afford to pay. What is the going rate in your area for said services? 5) Be sure to include pay raises (opportunities for advancement, incentives, etc.). 6) Remember it's a learning curve for everyone. Knowing what is the right balance for you will be crucial. You don't want to feel "cheap" and you don't want to feel "resentful" because that will get in the way of you and your help doing a good job.

I have found that a virtual assistant and one or two freelance journalists/media specialists best suit my work flow. I do pay more for their services than I would an employee but I do not have to train them or work out a weekly schedule for when they can/can't be here in my home office. I hope this helps! Best, Karen

Krisha, I encourage you to find a way to feel more comfortable keeping a larger piece of the tuition-pie. Especially if you cannot find a way to formulate your instructors as independent contractors (it's been ages since I paid teachers, so I am no longer up to speed on those IC nuances) and you have to pay taxes and Labor and Industries and all that stuff. It's your business, you deserve a large cut for all the effort you've put into creating opportunities for instructors.

And, if your admin is kick-ass and an IC, then yes, probably $10/hr is too little.

But, what if you just ask your staff? If they have half a brain they'll know that if you pay them too much it is detrimental to your business and therefore to their job. And if they think you pay too little, well as we know ... subtle disgruntle simmers until someone feels burned.

Oh. And I think that a recent newsletter from Angi Carlston (another Seattle pole dancing instructor) just announced that she has hired an instructor, so maybe you could compare notes with her ... ?

I think that's some valid perspective. I see additional angles.

Someone might get paid $X, but that doesn't mean they "make" that much. (As you know, you don't "make" all the money you get paid from your students--there are all those expenses you bear.)

And looking at what someone earns at their (current) day job can be misleading--lots of us are earning a lot less in our current positions than we might elsewhere.

Plus, just because someone gets paid $X for an hour of work, doesn't mean they have enough hours of such work to keep them well-fed.

So, you can be offering your teachers a valuable opportunity to flesh out their income. And to diversify their skill set.

Setting your pay scale with heart/love is difficult. Best wishes.

Karen and Leila have made some valid points here.

In our business, we have never had employees (except for a very brief time when we hired our daughter as an administrative assistant). But we have had a lot of ICs over the years and it has worked very well for us.

I am up to speed on this topic because I just researched and wrote an article on ICs vs. employees for the South King County Business Report.

The benefits of using ICs are: 1) you can use in overload situations and not be committed to a full-time salary, day in and day out; 2) you are less vulnerable to worker lawsuits, including claims of discrimination; 3) and probably the biggest: you don't pay employment taxes, workers' compensation, sick pay, pension contributions, health insurance and other employee benefits.

The downside: Losing some control because you cannot tell them how to do their job; you lose the benefits of a long-term relationship; your right to fire is limited to the terms of the contract. But the biggest disadvantage may be the risk of government audits. (A misclassification can be costly. If the IRS rules that an IC is actually an employee, the employer is responsible for all back taxes owed, with interest, plus a penalty of 12-35% of the tax bill.)

This can be a particular problem at the state level (Labor and Industries) if the worker is hurt on the job and files an L&I claim. In that case, the taxes and fines can me substantial.

Sounds like you are well on your way to figuring it all out. And I agree with Leila. You as the owner need to pay a fair wage, but keep your portion enough to pay business expenses and still have enough for yourself.

I came upon this thread by accident and you may very well have resolved your issue by now, but I thought you might be interested in the perspective of someone who teaches privately (and earns in the same realm as a massage therapist for those sessions), but who also works as both an employee and independent contractor for others. You had mentioned feeling badly about paying an instructor less than what she would make by doing a massage session, but here are some questions to consider with that:

Is she getting value from teaching these classes that complements, enriches or diversifies her experience as a massage therapist?

Is she actually giving up a time that she would normally schedule a regular client to teach?

Does she have to pay you rent for the studio space?

Does she have to advertise to generate business for the classes, or do you do that?

How much time and money did she invest into becoming a teacher, as opposed to how much she invested in becoming a massage therapist?

How much do you actually pay yourself for teaching a class? (I know it's different as a business owner, but you can still break it down and get a ball park figure.)

How much revenue do you actually generate per class and how much of that needs to go back into the business?

For private sessions, I generally receive from $60-100, depending on the circumstances. When I work for someone else, I generally receive from $30-70 per class. I am willing to work for less as an employee because I a) have to do less advertising and legwork, b) don't have to pay rent, c) am teaching a group class so there's less prep time before and follow up after than with a private session, and d) as an employee, I get paid for my time even if no one show up for class. Also, generally when I'm being paid in the $30-35 range, it's because I'm subbing for the regular instructor. It's worth it to me to do this because it gets my name out there more, especially since I'm not affiliated with a specific studio, it builds good will and helps me develop my network of fellow yoga teachers, and I like doing it!

I hope that gives you a little food for thought!

As a former admin person, I have to say you are definitely underpaying your admin person. Of course, it depends on what she is doing for you.

Mid level admin works pays 13-14/hour. Top level pays 18. I'm sure freelance admin people here charge much more than that, as they dont get bennies with their job. You know the drill, yes?

10/hour is entry level pay...like a filing assistant and maybe someone who opens your mail. If they are doing more than that, def. up it to 13-14/hour at least.

Good luck!