6

I have been working for a startup for a period of time, which performs consulting work.

There has been a fair amount of pressure for individuals to meet a given number of 'billed' or 'billable' hours in any given week, which makes sense, as we're consultants.

The problem is that lately there has been pressure from management to start billing clients for time that wasn't spent on work to support the clients.

Things like a daily 15 minute meeting (1.25 Hours per week), an hour's worth of meetings at the end of the week along with various random other internal meetings, or even time that's spent on internal work, all of these, we're asked to just round whatever client we're working on for the majority of the day up to 8 hours to cover.

There's been a lot of pushback from employees on this, because it feels downright unethical, if not illegal. The question comes up, frequently, after spending any period of time on something that's related to internal work and not related to any of our clients, "Who should I bill for this?"

There have been days where I was not in the office for a full day, due to a late return flight from a travel arrangement, and was asked to submit 8 hours of time for a customer instead of the 5 or so hours that I was in the office.

My question to you: Is this ethical? Is this legal?

  • 1
    Legal requires specifying exactly where you are and exactly how the contract is written, and is better handled by asking a lawyer who practices in your area. Ethics: The meetings are a legitimate part of the cost of running the consulting business, but they should either be built into the hourly fee or (if the meeting really is part of a specific project and the contract permits it) billed to that project. Travel time ditto. Tossing random numbers of minutes into random bills is less defensible simply because it is hard to apportion fairly. – keshlam Jan 12 '17 at 5:06
  • 2
    If it doesn't affect the price to the customer, it's strictly internal bookkeeping and handwaving is sloppy but not unethical. Unless AZ law says otherwise, or the contract (eg, with the government) requires accurate tracking of every tenth of an hour. – keshlam Jan 12 '17 at 5:14
  • 1
    As I said, it may be legitimately billable time. Or it may not be. Or it may be but the bookkeeping may be bad. – keshlam Jan 12 '17 at 5:31
  • 3
    If I spend 12 hours on a flight where the sole purpose of my travel is to do my job, I don't see anything unethical in billing that to the customer. On the contrary, I would argue that "billing" business trips to the employee's personal time is unethical. Point here is "ethics" is a very subjective topic, except in the most obvious cases like, "thou shalt not steal company food" (and maybe not even in those cases always). – Masked Man Jan 12 '17 at 7:52
  • 1
    There was a good TV episode once that covered billable time. In it the person who was being told to charge for the meeting's they went to wrote up a bill for the employer for their time. The moral being that You are doing work for your employer, and so the person who should be billed for it is your employer. How they deal with it after that is up to the employer, but You will have provided your 8 billable hours. – TolMera Jan 12 '17 at 8:39
8

Is this ethical ?

Billing activities that are absolutely not client-related is not ethical at all. The simple fact that it disturbs you and several other employees shows that this should not be done. You are charging someone for a service that you only partly perform. As a rule of thumb, whenever you ask yourself "Is this perfectly ethical?" it probably isn't.

Is this legal ?

It could vary depending on the countries and on the specifications of the contract. But the general answer would be no, as you are not providing what the customer bought.

Now to the tricky part. This kind of billing is not ethical nor legal, but it is a common practice in jobs using per-hour billing (programming also comes to mind). The reason is the following : how is anyone going to check this ? Unless someone actively reports your company to auditors or government, it's extremely complicated to check that every billed hour has been an actual consulting hour - and not everyone is willing to be tagged as a whistleblower, in a sector where networking matters.

  • 1
    Good answer. There is also the issue that it is not always clear if the "internal" work does not benefit the customer. Example, if they held a meeting to decide ways to speed up their servers, so that they can run more regression tests, is that billable to the client (because the code given to the client is now more thoroughly tested), or not (because the faster server still belongs to the employee)? Long story short, measuring these things down to the last nanosecond is way too much effort, so nobody would be willing to do it. – Masked Man Jan 12 '17 at 8:56
  • 1
    Absolutely agree. Further to this, reputable companies often have an internal code for non-client work. This is often used for things like admin, performance meetings, internal IT work, etc. These costs should be covered by the company and not by the individual clients. – JohnHC Jan 12 '17 at 9:51
  • Thank you for your answer. I agree with you and I think I will end up reporting it. – anon Jan 12 '17 at 14:45

Your Answer

By clicking "Post Your Answer", you acknowledge that you have read our updated terms of service, privacy policy and cookie policy, and that your continued use of the website is subject to these policies.