Topic: Paying my staff in BTC -- effects? (Read 3702 times)
It seems like Bitcoin's leg to stand on will be in enabling digital barter/trade solutions. The coins themselves not being as useful as the services that use them for exchange. Imagine a site where people begin trading time with other people, using Bitcoin as the de-facto standard exchange medium, instead of some proprietary mechanism. There would be a level of trust put upon the organization to promote a fair marketplace (otherwise users can move elsewhere). If enough people are using such a system, and also providing an entire catalog of self-produced products, we could have a new world structure.
Everyone could be on the same level, at least as far as their real worth is concerned. A hairstylist in Atlanta can trade the same time for coins to trade for coins and time from a dentist in New York. We only need to have people opt-in to the system to begin using it and receiving coins for time. I guess someone has to seed it too. :-)
Maybe it's a pipe dream, I dunno. Sounds better than this money slavery thing. We all need food, shelter, clothes and each other. Everything else is fluff.
So i have a few staff members across the country that we are considering using BTC as currency.
1. Bitcoin is far too volatile for that.
2. It's illegal in the US, under the Fair Labor Standards Act. This requires payment in "cash", because of a historical scam - payment in scrip only useful at the "company store". So you can't pay your employees in frequent flyer miles, Facebook points, or Bitcoins.
Yes sir, Mr. government tool. Heil Obama and all the rest of the uber upstanding politicians.
However, not to be picky, but didnt you say bitcoin was over? Just so we can get the jibber jabber straight.
He's not a government tool, he's right. It's been illegal for decades. Payment for labor in anything except money is illegal.
If explicitly stated in the contract of employment (not likely unless you are very high-up), payment *may* be given out as stock options, futures or shares, like in the case of Steve Jobs (whose 'salary' was only one dollar a year, but earned about 10-20m annually through stocks)
Payment in gold, silver, bitcoins, McDonalds vouchers or anything else is illegal.
well if we only did this with contractors -- how is that any different than finding a freelancer looking for btc?
I don't know the details of the subsection of that ginormous document that was referred to (did a little searching and could not find the part talking about what form of cash etc. just regular mention that minimum wage is defined as "$X.XX cash" but that would even leave open paying in equivalent value Euro would it not?
Anywho.... Contractors are a unique animal, one in which you would probably need non-coercive written agreement signed that they are "opting in" to be paid in such a manner. And you would have to be very dilligent to ensure their wages are meeting all other standards at the time they receive them (i.e. minimum wage, applicable taxes, etc.)
and what if there is no contract at all. Some of these guys i have been working with for a couple years and just pay them weekly for their services. it has been flawless thus far as we have a pretty good working relationship
Why not just pay them the dollar amount in mtgox codes, and then they are free to convert to bitcoins whenever they like (assuming they don't mind the problems associated with getting the non-Bitcoin cash out of mtgox into their own currency)
So i have a few staff members across the country that we are considering using BTC as currency.
Really? REALLY? You're actually thinking of this?
Bitcoins has a (slight!) potential to become a real currency, but for now it's magic money! The volatility and low trade volume mean that regardless of what you give them, your staff are going to get paid _roughly_ their salary +/- 50% or so. Furthermore, they won't be able to spend it until they've traded it and extracted the cash.
Ah, yes. Friday night of a long weekend, pay comes in, and...nobody wants to buy BTC for the rate that makes their pay correct. "Hey man, wanna come to the bar with us?" "Nah, I can't. Couldn't trade my BTC tonight, so I'll have to wait out the slump. Sure hope it recovers before I have to pay my rent."
Do Not Do This.
So i have a few staff members across the country that we are considering using BTC as currency.
1. Bitcoin is far too volatile for that.
2. It's illegal in the US, under the Fair Labor Standards Act. This requires payment in "cash", because of a historical scam - payment in scrip only useful at the "company store". So you can't pay your employees in frequent flyer miles, Facebook points, or Bitcoins.
Yes sir, Mr. government tool. Heil Obama and all the rest of the uber upstanding politicians.
However, not to be picky, but didnt you say bitcoin was over? Just so we can get the jibber jabber straight.
What happens when you pay them at 7pm on a Friday and they try to cash out on Saturday at 10am, only to discover that their $1600 is now $1200? You're going to lose that employee and the Department of Labor will fine the shit out of you.
That's considering the dip in price at weekends.
What if he bought $1600 worth of coins on a Saturday / Sunday, then paid his employee(s) on the Monday or Tuesday?
With the dip on the weekend taken into account, the coins should be worth slightly more by mid week, so when he pays out $1600 of coins to the employee(s) he may have a little change left for the next week of wages.
On the other hand, if the employee has agreed to accept bitcoin as payment, surely they should be fully aware that the price could go either way after they're paid.
What happens when you pay them at 7pm on a Friday and they try to cash out on Saturday at 10am, only to discover that their $1600 is now $1200? You're going to lose that employee and the Department of Labor will fine the shit out of you.
yea but if they are in different countries, their currency doesnt have that kind of volume. Would really be looking to send them BTC so they could exchange for GBP or INR; but those currencies dont have the same volume as mtgoxUSD
This would be a problem. For example, the only INR exchange listed on bitcoincharts has a 30 day trade volume of 300BTC. I think that you should consider this only for GBP and EUR payments (britcoinGBP and MtGoxEUR/TradeHillEUR seem to have a decent amount of volume). Other currencies won't work right now.
Having an external company dealing with the fluctuation for a small percentage would be ideal, like someone else suggested. Have you tried emailing the guys at bit-pay?
Maybe you could pay bonuses in BTC 
What effect would this have on the market if the buys and sells were almost back to back?
Almost none. 290 btc is about 1/500th of MtGox's weekly trade volume assuming very low average days of 20,000btc per day. Today alone there was over 100k of traded money.
You can quite smoothly buy that amount of btc, transfer it to employee, and then he/she sells it back. The market will neither care nor notice that amount of funds.
yea but if they are in different countries, their currency doesnt have that kind of volume. Would really be looking to send them BTC so they could exchange for GBP or INR; but those currencies dont have the same volume as mtgoxUSD
What effect would this have on the market if the buys and sells were almost back to back?
Almost none. 290 btc is about 1/500th of MtGox's weekly trade volume assuming very low average days of 20,000btc per day. Today alone there was over 100k of traded money.
You can quite smoothly buy that amount of btc, transfer it to employee, and then he/she sells it back. The market will neither care nor notice that amount of funds.
So i have a few staff members across the country that we are considering using BTC as currency.
1. Bitcoin is far too volatile for that.
2. It's illegal in the US, under the Fair Labor Standards Act. This requires payment in "cash", because of a historical scam - payment in scrip only useful at the "company store". So you can't pay your employees in frequent flyer miles, Facebook points, or Bitcoins.
I don't think heruspex owns Standard. (Oil/Coal)
You can technically give your employees a salary of $1 and give them Bitcoin "benefits" though.
I guess i should clarify the term employees. the ones partaking would be developers scattered across UK, India and europe. other than my self, none are actually in teh US. They are all free lancers who are in business for themselves. They just happen to give me alot of their time because it is mutually beneficial.
At least in the US, I wouldn't do this with employees. It's a hot landmine to walk on.
If employees went to the Department of Labor and simply claimed that they felt coerced and that their agreement to accept BTC wasn't truly voluntary, even if the employees signed something saying otherwise, the Department of Labor would act swiftly. They already aggressively pursue even minor claims like employees getting shorted overtime a few minutes a day etc. In my view, the legal protections afforded to employees operate with the assumption that employees are already in a reduced position of bargaining power, and simply "asking" an employee to agree to something is easily painted to be equivalent to coercion. (Disclaimer: I'm not a lawyer)
Only do this with people that are clearly in business for themselves and who are clearly in a position to accept or reject bitcoins as payment.
Nothing says you can't give employees small unsolicited bonuses or rewards in BTC - it is probably no different in that respect than a gift card to their favorite steak house.
If employees went to the Department of Labor and simply claimed that they felt coerced and that their agreement to accept BTC wasn't truly voluntary, even if the employees signed something saying otherwise, the Department of Labor would act swiftly. They already aggressively pursue even minor claims like employees getting shorted overtime a few minutes a day etc. In my view, the legal protections afforded to employees operate with the assumption that employees are already in a reduced position of bargaining power, and simply "asking" an employee to agree to something is easily painted to be equivalent to coercion. (Disclaimer: I'm not a lawyer)
Only do this with people that are clearly in business for themselves and who are clearly in a position to accept or reject bitcoins as payment.
Nothing says you can't give employees small unsolicited bonuses or rewards in BTC - it is probably no different in that respect than a gift card to their favorite steak house.
well if we only did this with contractors -- how is that any different than finding a freelancer looking for btc?
So i have a few staff members across the country that we are considering using BTC as currency.
1. Bitcoin is far too volatile for that.
2. It's illegal in the US, under the Fair Labor Standards Act. This requires payment in "cash", because of a historical scam - payment in scrip only useful at the "company store". So you can't pay your employees in frequent flyer miles, Facebook points, or Bitcoins.
So i have a few staff members across the country that we are considering using BTC as currency.
If i were to send 1600USD per week in BTC (currently ~290 btc); and then they were to immediately turn around and sell all or part of them for their currency (either GBP, EUR, etc);
What effect would this have on the market if the buys and sells were almost back to back? looking at the trade history -- just curious if 1600 back and forth is enough to cause problems for either party using BTC
RW
Edit: I think that their arent enough buy/ Sell orders for the conversion to be comparible. I think that the buyer would end up paying way more than what the seller would be able to flip them for.
RW
If i were to send 1600USD per week in BTC (currently ~290 btc); and then they were to immediately turn around and sell all or part of them for their currency (either GBP, EUR, etc);
What effect would this have on the market if the buys and sells were almost back to back? looking at the trade history -- just curious if 1600 back and forth is enough to cause problems for either party using BTC
RW
Edit: I think that their arent enough buy/ Sell orders for the conversion to be comparible. I think that the buyer would end up paying way more than what the seller would be able to flip them for.
RW
So what you have to remember here is that no matter what you will do there will be a gap, really your going to be boosting liquidity of the market, with only small alterations. If you wisely used optimal exchanges for each side of the transactions you will be also helping to keep the exchanges balanced among each other.
Taxes will be a concern, even if you are paying in BTC you will still have an issue if discovered and you will be in time because the governments want their money.
I would recommend encouraging a group such as bit-pay or the like to develop a payroll system for you to use, this would allow you to pay in BTC and then your employees could choose to be paid in BTC or in fiat currency and bit-pay or whoever (reputable) that makes this service would then handle the delivery to your employees and tax implications for you. This would be a highly marketable service as BTC adoption increases and you would be on the cutting edge of it.
thats what i was looking for -- we definitely see the benefits of BTC. Some would want to trade for their currency and some employees/ contractors would want to keep some in BTC. The liquidity would definitely help overall. I was just afraid that buying 5k USD in bit coins would cause a massive increase in the buy price, and similarly when the emps try to cash their coins.
they still need to make sure they pay tax on income, just like you would have to pay any payroll tax in your jurisdiction
good point
i think the real solution is to just have a larger btc economy =]
i think the real solution is to just have a larger btc economy =]
Jump to: