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Veterinary Compensation: Question Regarding Production Pay and Paid Time Off

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  • Veterinary Compensation: Question Regarding Production Pay and Paid Time Off

    Hello -

    My wife is a veterinarian and recently started working at a large corporate employer. A month ago she took her first paid vacation time and she has a question regarding how production pay is determined with paid time off.

    Example scenario:
    Biweekly base pay of $4000 or $2000 per week.
    During week one of the pay period, my wife produces $3k worth of earnings (covering her $2k base + $1k in production).
    During week two of the pay period, my wife takes 40 hours of paid time off which should be compensated at the base rate of $2k ($50/hr).

    At the end of the pay period, her employer says that during the pay period she did not meet the minimum threshold of $4k to earn production. What we are confused about is why they are not factoring in paid time off into her production. In her mind, she should receive $3k from the first week from production, and then $2k from the second week for paid time off. The way her employer currently is calculating it, they seem to be "double dipping" by charging her 40 hours of PTO but really only paying her for 20 hours (the first 20 of PTO hours is covered by production in the first week). In the scenario, by not paying her production and by deducting 40 hours of paid time off, they are compensating those 40 hours at $25/hr which is half her base rate. Is this standard practice? and If not, how does one address this with a large corporate employer.

    If anything is unclear or if there are any additional details I can provide please let me know. Any insight is greatly appreciated!

    Thank you

  • #2
    You are using math, the employer is using logic. I can see both sides of it. Does her contract not address this? Seems that a corporate employer would have this covered.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

    Comment


    • #3
      Originally posted by Alkylhalide View Post
      Hello -

      My wife is a veterinarian and recently started working at a large corporate employer. A month ago she took her first paid vacation time and she has a question regarding how production pay is determined with paid time off.

      Example scenario:
      Biweekly base pay of $4000 or $2000 per week.
      During week one of the pay period, my wife produces $3k worth of earnings (covering her $2k base + $1k in production).
      During week two of the pay period, my wife takes 40 hours of paid time off which should be compensated at the base rate of $2k ($50/hr).

      At the end of the pay period, her employer says that during the pay period she did not meet the minimum threshold of $4k to earn production. What we are confused about is why they are not factoring in paid time off into her production. In her mind, she should receive $3k from the first week from production, and then $2k from the second week for paid time off. The way her employer currently is calculating it, they seem to be "double dipping" by charging her 40 hours of PTO but really only paying her for 20 hours (the first 20 of PTO hours is covered by production in the first week). In the scenario, by not paying her production and by deducting 40 hours of paid time off, they are compensating those 40 hours at $25/hr which is half her base rate. Is this standard practice? and If not, how does one address this with a large corporate employer.

      If anything is unclear or if there are any additional details I can provide please let me know. Any insight is greatly appreciated!

      Thank you
      It seems like they are double dipping because they are. Welcome to Big Medicine.

      Comment


      • #4
        I get both sides. For comparison, most jobs in emergency medicine are "if you don't work, you don't get paid" so at least she has some PTO as a benefit.

        Comment


        • #5
          Originally posted by jfoxcpacfp View Post
          You are using math, the employer is using logic. I can see both sides of it. Does her contract not address this? Seems that a corporate employer would have this covered.
          Her contract does not address this specifically - because she is in an area where there is a high demand for veterinarians the language of her contract changed dramatically from their boilerplate contract she was presented after she worked with her attorney. It does address PTO, no negative accrual, but now how it is determined per pay period.

          In our mind, had she worked as did in the above scenario for 40 hours, took 20 hours of paid time off and 20 hours of unpaid time off, her compensation for that time period would not have changed, which is strange and not inline with production pay at her previous employers.

          Comment


          • #6
            Originally posted by Alkylhalide View Post

            Her contract does not address this specifically - because she is in an area where there is a high demand for veterinarians the language of her contract changed dramatically from their boilerplate contract she was presented after she worked with her attorney. It does address PTO, no negative accrual, but now how it is determined per pay period.

            In our mind, had she worked as did in the above scenario for 40 hours, took 20 hours of paid time off and 20 hours of unpaid time off, her compensation for that time period would not have changed, which is strange and not inline with production pay at her previous employers.
            This contract is with her current employer and not previous employers. Just because it was done one way at another job doesn’t mean it’ll be done the same way at another. I can’t speak to veterinary employers so I don’t know what is typical but this should be spelled out in the contract. Since it doesn’t address this then it would probably be tough to prove your point to them but if it’s an area where they need vets then maybe you can try to use that leverage. Or she can start her own practice but she’ll get all the headaches that comes along with that including not getting paid if she’s not working (along with employees wanting to be paid when they’re not working ).

            Comment


            • #7
              I always thought that paid time off when on a production model was a misnomer. Previously, when I was on a production model and had “paid time off” all it really meant was that I still got a paycheck, but since I missed out on the production that week, my bonuses were lower and I had to do more work in the weeks I wasn’t gone to meet my baseline salary. When I had a guarantee my first couple of years it didn’t matter if I didn’t meet my baseline threshold, but after that they could have theoretically withheld some of my pay, had I not earned above that and received a bonus.

              For your spouse’s situation, if it isn’t clearly spelled out in the current contract, you’re probably stuck. One of the downsides of being the high earner is that no one wants to pay you to not work. The office still has to be open when your spouse is gone. The rent on the building still has to be paid. The staff answering the phones still has to be paid. Etc.

              Comment


              • #8
                This is the challenge of "pto" on productivity.models.

                Typically the budget would be spelled out based on xxx weeks of productivity that factor in the PTO and holidays and averaged every 4-12 weeks for smoothing.
                ​​​​​​
                then there's a tail to the productivity and adjustment of pay based on that trailing figure.

                This means there's a guarantee at the lead in.

                Special factors need to be addressed for extended leave. Child care, illness, medical. This would be done at the bylaws corporate level instead of the contract for a larger employer for overall transparency and governance.

                Comment


                • #9
                  Originally posted by CordMcNally View Post

                  This contract is with her current employer and not previous employers. Just because it was done one way at another job doesn’t mean it’ll be done the same way at another. I can’t speak to veterinary employers so I don’t know what is typical but this should be spelled out in the contract. Since it doesn’t address this then it would probably be tough to prove your point to them but if it’s an area where they need vets then maybe you can try to use that leverage. Or she can start her own practice but she’ll get all the headaches that comes along with that including not getting paid if she’s not working (along with employees wanting to be paid when they’re not working ).
                  Woah lets not jump straight into practice ownership. I think our confusion is that PTO is a built in component of her compensation package and its costs are largely fixed. While I understand your point about "employees wanting to be paid when they’re not working "- the solution to that is to not offer paid time off. But if an employer choose to offer it, stand by it, you know what I mean?

                  As for negotiating with her company, she might have some leverage as the position had been open for quite some time and in her first quarter she accounted for 45% of practice production in a three veterinarian practice - losing her would be quite a hit, especially since she out produces her base by +/-40%. On the other hand, I pointed out to her that with how they are calculating her PTO, they are really not providing much of a disincentive for taking unpaid time which would enable her to travel to see her family more often.

                  I am glad to see that this isn't quite as strange to other as it is to us. Thank you for the reply!

                  Comment


                  • #10
                    Easiest solution: start taking two week vacations

                    On a more serious note, does the employer reconcile production on a longer time basis (e.g. annually)? This would sort everything out on a long term basis.

                    I agree the contract should spell this all out.

                    Comment


                    • #11
                      Originally posted by Alkylhalide View Post

                      Woah lets not jump straight into practice ownership. I think our confusion is that PTO is a built in component of her compensation package and its costs are largely fixed. While I understand your point about "emmployees wanting to be paid when they’re not working "- the solution to that is to not offer paid time off. But if an employer choose to offer it, stand by it, you know what I mean?
                      They are standing by it. They’re not counting her PTO into her production amount which makes sense. This was purposefully set up like this to subsidize the PTO benefit. Money for benefits have to come from somewhere. A solution that would satisfy them and you would look something like this: her PTO base pay counts towards her production threshold BUT she gets paid less for her production. I can guarantee it would be setup where there wouldn’t be a significant financial effect to the company over how things are done now. Would she feel better if her PTO counted towards production but her production pay was less?

                      Comment


                      • #12
                        Originally posted by MaxPower View Post
                        I always thought that paid time off when on a production model was a misnomer. Previously, when I was on a production model and had “paid time off” all it really meant was that I still got a paycheck, but since I missed out on the production that week, my bonuses were lower and I had to do more work in the weeks I wasn’t gone to meet my baseline salary. When I had a guarantee my first couple of years it didn’t matter if I didn’t meet my baseline threshold, but after that they could have theoretically withheld some of my pay, had I not earned above that and received a bonus.

                        For your spouse’s situation, if it isn’t clearly spelled out in the current contract, you’re probably stuck. One of the downsides of being the high earner is that no one wants to pay you to not work. The office still has to be open when your spouse is gone. The rent on the building still has to be paid. The staff answering the phones still has to be paid. Etc.
                        Thank you for the reply - I think you're right. The contract you describe sounds like a negative accrual model where if you don't produce enough to hit your base salary for one pay period, it carries over to the next (I could be misreading that). We did make sure that negative accrual was not included in her contract as we learned that hitting those numbers has more to do with support staffing levels than what she does on a day to day basis. She currently out earns her base by +/-40% which is a combination of her base being average for the area while having a skillset that allows her practice to offer some of her procedures at a premium. She's asking about it but doesn't expect it to change based on the language (or lack thereof in her contract) - mostly because she wants to point out that based on last quarter she accounted for nearly half her practice's production. Personally, I don't expect it to change but I thought it made sense to ask.

                        Comment


                        • #13
                          Originally posted by CordMcNally View Post

                          They are standing by it. They’re not counting her PTO into her production amount which makes sense. This was purposefully set up like this to subsidize the PTO benefit. Money for benefits have to come from somewhere. A solution that would satisfy them and you would look something like this: her PTO base pay counts towards her production threshold BUT she gets paid less for her production. I can guarantee it would be setup where there wouldn’t be a significant financial effect to the company over how things are done now. Would she feel better if her PTO counted towards production but her production pay was less?
                          I understand your point - I guess my question is: what is the disincentive for unpaid time off with this model?

                          Comment


                          • #14
                            Originally posted by familydocPA View Post
                            Easiest solution: start taking two week vacations

                            On a more serious note, does the employer reconcile production on a longer time basis (e.g. annually)? This would sort everything out on a long term basis.

                            I agree the contract should spell this all out.
                            Honestly, when my wife showed me this, my response verbatim was "darn, I guess we're going to have to spend two weeks in Costa Rica instead of one."

                            As for your question, I'm not sure and my wife isn't either but we can try to find out. I'm curious what her employer's response will be but I don't anticipate it leading to any kind of change.

                            Comment


                            • #15
                              "weekly vs pay period vs annual". PTO and incentives comply with state and national labor laws most likely. "Use it or lose it" or rollover or a cap or a request for pay for "unused PTO" or a rollover are very common and factor into both the employer and employees interests.
                              The "unlimited" accrual will always not be permitted in private businesses.
                              I really suggest that the total comp and PTO be considered in total, not on one pay period or week of a pay period. A corporate policy needs to apply to all employees. In this situation, take two weeks off, not one.

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