It has been a while since the last discussion on ethics (see “The Ethics of Editing: The Sour Job“) and I thought it is time to return to the topic of ethics in editing. Today’s first question, as asked by Teresa Barensfeld, is:
Is it ever okay to pad your hours if billing hourly?
The quick, concise, and precise answer is: In my view, no, it is never okay to pad one’s bill.
Analysis begins from this perspective: (a) If I were the client, would I expect a vendor to pad its bill? (b) Would I be happy with the vendor if the vendor padded its bill? (c) Is this how I want to be treated in every-day transactions — be told one price yet being charged a higher price than quoted? No matter how I twist and turn, I find that my answer is consistently “no.”
In the scenario at hand, the editor and the client have agreed upon an hourly rate which is supposed to represent actual hours worked. (This is why many editors do not work on an hourly basis; it is too limiting.) The client has certain expectations that presumably were discussed beforehand, such as how many hours the project is expected to take.
And that is where the problem lies. The editor assumed that the project would require a certain amount of hours only to discover that, for example, it took half the expected time. Now is when the question of padding arises. Does the editor bill for the expected number of hours or for the actual hours worked? Or does the editor bill for some number of additional hours, a number between actual hours spent and expected hours, or for actual hours?
If you hire a plumber to do some work and the plumber tells you the price is $100 an hour and that the job is expected to take 10 hours, but the job goes faster and only takes 5 hours, do you want to pay $500 or $1,000? I know that as the client I want to pay what was agreed: $100 an hour for the actual number of hours.
If that is my expectation in my personal transactions, on what basis would I assume or expect my client to willingly pay me for more than what was bargained: my actual time? In fact, we tend to separate our positions. When we are the consumer we expect vendors, which are typically companies, to behave in a manner that benefits us. And when we are the vendor, we want our clients to behave in a manner that benefits us, which means being willing to pay for expected time rather than actual time.
I view this question as being a fraction of the entire contract between myself and my client. My contract includes the scope of the work to be performed, the schedule for my performance, and the expected payment time frame, among other things. Consequently, if I expect my client to pay me timely as per our agreement, should not my client expect me to bill per our agreement?
The not-discussed questions, which arise from the original question, are these:
- What if the expectation is that the project will take no more than 100 hours but the editor is 75% done and has already reached the 100-hour mark?
- Does the expectation act as a billing ceiling?
- What are the editor’s obligations?
- The client’s obligations?
- What effect do the answers to these questions have on the answer to padding?
These questions need to be addressed but another day. Today, the focus is on padding. I see no justification for padding one’s bill. Yet the question appears to become more involved and the answer more complex when we consider the following variances (which Teresa Barensfeld raised as part of her padding question):
What if the client tells you that although it accepts your flat-fee price, because of the company’s accounts payable policy, you still have to bill by the hour, with the knowledge that the number of hours on your invoice is not the actual number of hours, but the number that will make the final amount equal your flat fee? What if the client told you this after you started the job?
In this situation, there has been a major/significant change in the project terms. We have gone from an agreed hourly rate to an agreed project fee (“flat fee”). This is a very major/significant change. The client’s expectation is that the project will cost $x, regardless of whether the project takes 5 hours or 50 hours to complete. (Worth noting is that there is no difference between a project fee and a per-page fee assuming that there is agreement upfront on what constitutes a page. In both instances, a project’s total cost is determinable in advance by a client and the client’s predetermined cost should match the editor’s predetermined fee.)
The quibble, and it is a quibble, is whether how a project needs to be invoiced (in this case in hours) makes a difference. My answer is “no, it makes no difference.” Some accounting systems need certain data to work correctly; it is simply a method for getting to the correct result. In the suggested scenario, preparing the invoices to reflect hours even if the editor didn’t actually work those hours, is just an accommodation to the client’s mechanical process. I would also add that the request is being made by the client, not the editor.
The distinction is not subtle — dare I use the word? The distinction is between fraud and no fraud. In the original circumstance where the agreement was $x per hour, the expectation was that editor would charge for actual hours worked. In such circumstance, padding amounts to fraud (deceit, if you prefer). In the current circumstance, the client is being asked to pay the exact amount agreed upon, thus no fraud/deceit. There is no padding.
And in this instance the agreed-upon flat fee acts as a ceiling. It does not matter whether it takes the editor 5 hours, 50 hours, or 150 hours to complete the project — the total cost to the client remains the same. Of course, we run into the same questions should the editor determine that the project is taking longer than expected and the editor wants to add to the agreed-upon fee for those additional hours.
The ending question (“What if the client told you this after you started the job?”) makes no difference in my estimation. This is simply an accounting procedure because that is how the client’s system is set up. There is no dispute regarding the fee to be paid/charged. Ultimately, that is the issue: Is a dispute about the amount to be paid created by the editor’s actions? If yes, then there may be an ethical question; if no, then there is no ethical question (assuming the method for calculating the fee is itself legal and ethical).
So, my answer is that padding is always unethical (and tantamount to fraud) but accommodating a client’s request to bill for the agreed-upon sum in a certain way because the client’s accounting system requires it is not unethical in the situation presented.
Do you agree?
Richard Adin, An American Editor
(Do you have questions about ethics that you would like to see discussed? You can either ask them in comments to this essay or drop me an email with the question[s].)
An American Editor 
I’m not comfortable with the concept of padding a bill. If I’m on an hourly rate, I charge only for the time spent on the project. If it goes faster than expected, I might stop and do a second run-through, both to make sure I haven’t rush myself and missed anything and to earn as much from the project as possible, but that’s the closest I get. I try to provide as close a time estimate as possible, and I always tell clients that (a) I’ll only charge for time actually worked if it takes me less time than expected and (b) I’ll notify them as early as possible if it looks like I’ll need more time.
If a client said to bill by the hour despite agreeing to a flat fee, I wouldn’t consider that padding the bill. The total amount has been agreed to, regardless of how it’s presented, and my time isn’t relevant as it would be for a truly hourly-billed project. I don’t think it would matter when the client told me about restructuring the invoice. The agreement is for payment of $X, no matter how it’s described. Recasting that amount in terms of an hourly rate doesn’t change the amount.
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Comment by Ruth E. Thaler-Carter — January 5, 2015 @ 11:24 am |
I agree that padding hours is unethical, and I don’t do it. Actually, the only one of my questions (which I originally posed in a comment to one of AAE’s posts as food for thought) that truly puts freelancers in a dilemma is when a client has accepted a flat fee and sent the freelancer the work, the freelancer has finished the work and sent the invoice, and then the client tells the freelancer that, oops, the client made a mistake and freelancers indeed has to bill by the hour. This has happened to me, and it’s not just annoying but puts me in an ethical quandary. If I reply that we already have an agreement and cannot change it now after the work has been done, and the client still insists that the invoice must be done this way, then this is actually fraud (or maybe breach of contract) on the part of the client, and how to handle it is not cut and dried. If I want to go the legal route, I will win, as I have the agreement (even if only email, it’s still a contract), but that would be expensive and circuitous. The few times this has happened to me, I’ve found that the only viable option was to bill for my flat fee, broken down by number of hours times hourly rate — which still doesn’t necessarily mean padding the hours.
If we never talked about hourly rates, then, yes, I could just take the flat fee we agreed upon, divide it by the hours worked, and calculate my the hourly fee for that job, and then bill according to that. More often, though, I have rejected the client’s hourly rate and submitted a flat fee instead. By accepting that fee, the client is contractually agreeing to not only my price but also my pricing method. Thus the client has agreed that I don’t have to account for hours, and indeed, I could do the job without tracking my hours at all. (That I do that for my own purposes is not relevant.) Thus, the client has forced me into a dilemma: getting paid for the agreed-upon amount by padding my hours or taking less than the agreed-upon amount because of the client’s mistake (which, and I haven’t even touched upon this, could have even been intentional — a “bait and switch” ploy). Needless to say, whichever route I took in this situation, I would make sure that in the future this client was willing to pay flat rates or I would stop working with the client.
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Comment by Teresa Barensfeld — January 5, 2015 @ 1:00 pm |
Another, not unethical but certainly unfair stipulation that some clients like to add to agreements for hourly work is the ceiling for number of hours, but no minimum number. In other words, the client is taking no risk at all, but the freelancer taking a risk on both the high and low end — if the freelancer works more hours on the job than the maximum, he or she can still only bill for the max hours (and that raises the question of why this isn’t also fraud on the part of the freelancer, reporting an untruthful number of hours?), but if the freelancer gets the work done in fewer than the expected number of hours, he or she can only bill for those actual hours, meaning a lower total amount than what the client was willing to pay.
The advantage of a flat fee (or page rate, which amounts to the same thing) is that, in terms of risk, neither the client nor the freelancer has an advantage over the other; that is, they’re each taking an equal risk. The freelancer’s risk is that the work will take longer than expected and thus the freelancer will earn less per hour. The client’s risk is that the freelancer will take less than the expected amount of time, and thus the client is paying more than if an hourly rate were used. However, because everyone knows the amount to be billed at the outset of the job, each of these risks is in a sense mitigated by the certainty of the flat fee.
Anyway, I know I’m singing to the choir about flat fees! Convincing clients that this is the best method is sometimes challenging, though.
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Comment by Teresa Barensfeld — January 5, 2015 @ 1:09 pm |
Richard, I find your analyses of these disparate situations spot on and, as customary, thought provoking, as the cogent comments by Ruth Thaler-Carter and Teresa Barensfeld evidence. I prefer flat fee as a known and equitable arrangement for reasons analogous to Teresa’s. As I edit academic papers to be submitted as journal articles, however, I offer clients the opportunity to collaborate with me in person, primarily in an effort to provide an added benefit in the opportunity to improve their English writing in the process. (I should note that the authors are Brazilian professors and post-grad students.) In these cases, I charge an hourly rate. In any and all cases, I find padding unethical or, as I might put it, immoral. Thanks again for your comprehensive insights. Your service to your colleagues is greatly appreciated.
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Comment by Earl E. Appleby, Jr. — January 5, 2015 @ 11:56 pm |