What does the "First Payment Amount" Mean for Fixed Contractors?


On Step 3 of the contractor's new hire flow, there is a question on "First payment amount." This question will appear under the following conditions: 

  1. You are hiring a contractor at a fixed rate
  2. Their start date is not the first of the month

The "First payment amount" refers then to how you want to prorate the first month's payment.



There are a number of different ways to prorate. The Oyster app uses the "daily rate" proration:


There are ~260 working days in the year. To calculate a daily pay rate, take total annual pay divided by 260. Then, you can multiply this daily rate against the number of working days during that pay period.

For instance, if a contractor is starting work on June 14, you would calculate the first payment amount for the period of June 14-30.

In this case, let's say the contractor would be paid: 

  • $5,000 fixed pay per month, which is $60,000 per year
  • $60,000 divided by 260 days = $230.7692 daily rate

If the contractor is working 13 business days from June 14th - June 30th, then the "First payment amount" is $3,000, which equals the daily rate (~$230) times the number of working days  (13). 


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