What You Need To Know About eLearning Professionals' Payment Options
The most common types of eLearning professionals' payment options are to be paid as an eLearning employee or as an eLearning contractor. Each type has its own benefits and drawbacks.
eLearning Employee
Getting paid as an eLearning employee means that your paycheck will have certain amounts deducted, and you’re considered to be an “official” eLearning employee of the organization. For example, you may be hired to create a specific course, and your pay structure is mandated by the university. You may be hired as full-time or part-time eLearning employee. You may also work as a temporary eLearning employee. At year-end, you receive a W-2.
- Advantages
Being recognized as an eLearning employee means that the employer is paying for half your social security/Medicare tax. Since this tax is about 15%+ of your pay, up to a certain limit, this is a major advantage at year-end, when you may owe this tax in full. Depending on your state, you may also be covered by disability insurance and even unemployment insurance. Another advantage is that you may be eligible for paid vacation, health insurance, discount programs and other perks available to employees only. Some universities even give you and your family tuition reimbursement after so many hours on the job and other perks that can be very beneficial. - Disadvantages
Your paycheck will be smaller because federal and state taxes are taken out from it. You may have negotiated pay at $30 per hour to create a course, for instance, but your take home pay may be less than that because of all the deductions, which may cause disappointment and personal cash flow problems. Another disadvantage is that expenses usually cannot be deducted from pay on tax returns. If you have many expenses, such as office supplies or other business costs, such as equipment or your own software, eLearning employee status may not be your best option as these costs will not help decrease your tax liability.
eLearning Contractor
An eLearning contractor is an independent consultant to the organization. Often, contractors are hired to work on specific projects as self-employed people, who pay all their taxes. For example, you may be hired to review a course as an expert, and the college may consider you as a self-employed eLearning contractor, agreeing to pay you a certain amount at the end of the project. At year-end you receive a 1099, not a W-2.
- Advantages
eLearning contractors often get paid with nothing taken out of their paychecks. No withholdings, so their paychecks are larger. If you are paid at $30 an hour and you work 10 hours editing a course, your paycheck will be $300. You usually have flexibility about how you do your work, and when you come in and go out from the office. Another advantage is that you can deduct expenses on your taxes related to self-employment, such as postage or office supplies. This can be a major plus when you have many expenses related to self-employment, decreasing overall your tax bill. - Disadvantages
When you’re self-employed, you will pay in full for your self-employment tax at year end, which is your social security/Medicare tax at 15%+. You also may be required to carry your own insurance to perform your services, and your taxes may be a bit more complex than those of employees. Since you may owe taxes at year-end, you may have to make estimated tax payment throughout the year, which takes discipline.
When you’re offered an eLearning project as an eLearning contractor, you may be able to negotiate higher wages because you’re paying all the payroll taxes and assuming some risks. You don’t get disability insurance or any other protection eLearning employees do, for instance. If you’re terminated, you don’t have the same protections as eLearning employees do.
Understanding the differences between these two types of eLearning professionals' payment options and navigating the eLearning environment with this knowledge can make you a bit “dangerous,” since now you can negotiate your own pay based on facts, not just personal preferences. You don’t want to have unpleasant surprises. Be well informed about these details—it can only help you!