Will Work for… Free?
Posted on June 15th, 2009 by Tim Eavenson | 2 Comments »Filed under: ., HR Issues, The Financial Crisis |
Economic troubles like recessions and depressions do funny things. They are trying, for sure. They are stressful and heartbreaking. But they also seem to have this way of driving innovation, particularly (we like to think) in America.
There’s just something about that vision of the Great Idea Man, rising up as the suits around him fall, developing the next great business model or product or managerial structure that will rocket the business into the stratosphere, and will become the modus operandi for the inevitable Return to Greatness we all know is just one great concept away. For sure, a lot of thought (and writing) has been spent in the current recession trying to divine what that next Great Idea is. Green Energy? Healthcare Reform? The Wuggie?
How about free labor?
A story on NPR this morning profiled Ariel Horn, the head of a small ad agency in New York, who thinks he’s come up with a novel model for riding out the recession. Horn has opened his doors to out-of-work execs to come in with their laptops, and utilize his company’s empty workspaces to look for work. They can use the company’s desks, and presumably the internet connection, and can spend all day just sending out resumes, if they want.
Or, you know, if they feel like it, they could “brainstorm” with Horn about possible pitches to TV stations or other clients. If one of the job seekers’ ideas hits, it could spell work at the Horn Group for a member of the unemployed brain trust. From the NPR story:
If one of the ideas takes, it could lead to a job for Horn and his agency. It’s happened before, and when it does, Horn hires the person who came up with the idea. He pays them by the project, with no benefits. For Horn, this kind of business model has a big advantage. The people who come here have all kinds of backgrounds — digital marketing, social networking, music videos. It means Horn’s agency can function like a much bigger company than it really is.
Well, sure. That is typically a benefit of getting something without paying for it.
I don’t mean to be hard on Horn or his idea. First off, letting freelancers use empty offices to come up with pitches isn’t new in the ad business. Even the whole “you-get-paid-when-we-get-paid” thing happens pretty often, I understand. Even if it’s not as novel as it looks, Horn seems to be repackaging the idea for the recession by turning these out-of-work execs into freelancers and his empty offices into job search stations.
To tell you the truth, I’m sort of on his side, here. Is it a little deceptive to “open your doors” to down-on-their-luck executives just to tap into their various networks and ideas? Maybe. But like the story notes, one of the biggest problems with losing your job is the feeling that your talents aren’t being utilized. If Horn’s method lets these guys keep their mojo while they’re searching, doesn’t that stand for something?
Is the business model a blatant violation of the Fair Labor Standards Act? Yeah, maybe. But so are most of the unpaid college internships in this Country. And when you think about it, how are these brainstorming sessions any different than a few guys in a startup partnership, each putting in ideas with no promise or remuneration, but with the understanding that success will be shared among them all?
My new-lawyer/compliance/fear-of-lawsuit brain says he should be putting some enormous waiver or contract in place before the “job searchers” ever plop down at a desk, but the part of me that wants to see the economy improve, see the concept of employment evolve, wants to encourage fostering partnerships with all levels of workers, that part of me wants Horn’s thing to be the Next Big Thing, no roadblocks, please.
And as long as it’s a victimless crime (which, done correctly, is what it looks like to me), maybe any violation with the FLSA says more about the FLSA than it does Horn’s business model. In this economic environment, laws should encourage people who are thinking of creative solutions, not boxing them in. And it’s clear by now that this recession is leading a lot of employers to use a lot more freelance, temporary, or other types of arrangements that would typically fall into independent contractor categories. Maybe instead of raising the red compliance flags at creative employers, it’s time we start analyzing the usefulness of the law they are being forced to comply with.
The concept poses a lot of interesting questions about what employment means, and what employees and employers both are owed. How involved can Horn get in helping the job searchers find other work? Can he endorse them? Does he have to worry about distracting them from their job searches if their brainstorming is successful, but they don’t get paid from it? At what point does Horn’s firm become an employment agency? What happens when one of the brainstorming sessions produces a good idea, but a bad employee/contractor? Who keeps the client after the job is done?
But these questions can be addressed by some short, to-the-point agreements that don’t have to overwhelm the freewheeling spirit Horn’s idea is trying to capitalize on. Plus, you can’t tell me normal employment relationships aren’t just as rife with issues. If that was true, we’d all be out of work.
Hi Tim,
I enjoyed the many points of view you bring to this post. In my former life as a graphic designer working in advertising and marketing, what you describe as working for free was called working on spec, and perfectly acceptable for many, especially for those starting out and wanting to get a foot in the door. Agencies still have to work on spec to create elaborate ad campaigns to win accounts.
I think Ariel Horn is doing a world of good providing work space for the unemployed. As a life and business coach I have been working with corporate refugees, the newly unemployed in recent months and I can tell you they are scared, depressed, cut off from their network and suffering from a loss of confidence. If their identity is tied to their job, they are really in trouble.
Tough times call for creativity, and it can be hard to find solutions in isolation. Ariel Horn is creating a win-win situation, giving people a space to connect, collaborate, create and find hope for the future, as well as keeping talent close by. He may not be able to hire them full time, but isn’t great he can hire them on a freelance basis?
10:15 am on June 19th, 2009.
Hi Tim,
I agree that we need to get the FLSA out of the way, as long as no one takes it to the point of abuse. How to draw the line? Well here are some ideas.
We have put employees on temporary layoffs, now referred to as “furloughs” and maintained their benefits for a maximum of 90 days while on furlough. If they are not called back within 90 days, they will be terminated and their benefits eligibility ends. We started doing this with some of the hourly workers that we thought we might bring back when work in their area picked up. It soon extended to some salaried supervisors and managers as well. In order to get these employees back to work before their benefits run out, we have brought them back part time.
The question became, how do you pay salaried employees working part time? I should point out that nearly all salaried employees are working at reduced salaries, and hourly employees have had both their hourly wages and, in many cases, their weekly hours worked reduced. So, the employees suffer as the business suffers during this economic hardship, with the continuity of benefits being one strong consolation and value we can offer.
My understanding of the FLSA is that it is never wrong to pay a person by the hour, as long as you agree on an hourly rate. We have been using the current salary divided by 2080 hours (or the weekly salary amount divided by 40) to use as an hourly rate for salaried employees now working uneven hours. While I think that’s fair, recording of hours is an issue – salaried employees don’t punch a clock. If I work 6.5 hours per day for five days, I expect to be paid for 32.5 hours that week, not 29 hours. Apparently I have to prove to payroll that I worked those hours and should not be docked for a lunch break I never took.
Another suggestion is to have the salaried employee come back at a reduced schedule (less than 40 hours) and a further reduced weekly salary payment. This keeps the employees receiving a flat weekly amount, which is how they are accustomed to being paid, and they don’t have to keep records of their hours. This is also fine, I think, if they are paid the flat rate regardless of hours put in, and they are not required to work well in excess of the agreed upon schedule on a weekly basis.
Another step we had to take was to cut holiday pay in half. April and May were both months with scheduled holidays. Those months were so dismal for the business, we had to reduce the holiday pay to manage the cash for the month. This also presents and FLSA question: Can you “dock” salaried employees by four hours, or 10% of their regularly weekly salary, during a week in which their is a holiday? Well, the only other option would have been further salary and wage reductions.
Tough times DO call for creativity, and it’s always a tightrope to walk between keeping people employed under the stringent legal rules and laying people off to get past those rules.
Great points made, Tim.
3:12 pm on June 28th, 2009.