Paying Overtime

[gway]

im getting sick and tired of all these workers complaining about this and that when it comes to gettin paid. they dont realize how lucky they are not to be workin on a bannana (sp) farm somewhere down in mexico. these guys are killin me when they are out there doing the work i can do in 8 hours takes them 12.5 to get it done...were working about avg. 64 hours a week here and after 40 i used tp pay up $$ now that the cash is all but used up they are hittin me up for overtime and that is crushn me to death!!! they think were makin $$ hand over fist, but im sure if oyu know its not all like that after ins, taxes expen. and all the other garbage were shelln out. so the question is do i have to pay overtime or how can i get around this and on average how many hours are you guys out there?? we have 2 dcrews pushn out 30 houses per day 5 days, and a 6th for landscapen??



PEACE!!!

[kutnkru]

We bank roll their hours and then apply the extra time to even out those weeks that they arent able to get in 40 due to inclement weather or personal matters.

This avoids the cash out of pocket and keeps things on an even keel for us.

Kris

[gway]

do you think this would fly???

say i pay the workers the reg 40 hour check for that week and role all the over 40 hours till the end of the year since they all cant find a job over the winter and this way they will get a check every week from us durring the winter for the over time hours that pilled up all year...just askn

[kutnkru]

We just keep rolling over them hours and yes they should end up with with 3-5 weeks of payroll at the end of the season if you keep rolling like you are with them 60 hour weeks in the spring and fall.

Kris

[LoneStarLawn]

Really don't think that is legal since a work week is considered a fixed 168 hrs (7 days at 24hrs)....meaning that anything over 40 hours within that time frame must be compensated accordingly..

www.dol.gov/dol/esa/public/regs/compliance/whd/whdfs23.htm

[thelawnguy]

Kris,

better change your pay habits cuz when (not if) dept of labor gets wind they will hand you your azz on a silver platter. Regardless of when you start doing the pay thing the right way, you are still liable for back wages for as far back as the inspector sees fit to "probe" (pun intended).

The latest issue of Tree Care Industry magazine has a good article on overtime. (pub of nat'l arborist ass'n) You would be surprised as to how wages are figured for time and a half-its not what you would ordinarily expect esp if you have employees regularly working OT.

[JimLewis]

I have used the method Kris does as well. We call it "Comp Time". I got the idea because another, larger, landscaping company does the same thing. They don't pay anything over 40 hours and then roll it over until the late fall or winter. Then their guys take a month or two off and travel to Mexico or whatever, still paid.

I've never used it to that degree. When I used it I would let the guys get a little over time (10 hours) and then I'd start accruing comp time. It sometimes gets up to where someone has a week or two accrued. But even that's fairly rare.

It helps that I explained this to the employees before they were hired. Then they know what they are getting into. And you get them to agree to the idea when they are most vulnerable and likely to accept it (when they just want a job.)

I don't know about the legalities of witholding pay for this length of time but I'm pretty sure you'd have to pay the comp time at the time and a half rate at least if you wanted to be 100% legal.

I do know that the company my wife used to work for used comp time as well. And they employee hundreds of people. Only difference was they'd let the employees accrue comp time after 40 hours and use it the same as vacation time, any time they wanted. For obvious reasons, we can't do that in our industry.

Another thing you might consider in regards to overtime; if you do the math, hiring one more guy is more cost effective than having a bunch of employees at 10-20 hours of overtime per week. Check out the math; Say you have 3 guys at a rate of $8 per hour. If they all get just 10 hours of overtime per week that's a total of $360.00 in overtime. You could have hired another guy at $8 an hour for a full 40 hour week for less ($8 x 40 = $320).

So knowing that, what if you hired another guy? Then he takes worker A's place on Monday. On Tuesday he takes worker B's place. On Wednesday he takes worker C's place. On Thursday, they all work. And on friday, the new guy takes a day off. Thus, they all work about 4 10 hour days. Plus you get an extra 10 hours of labor one day!!!

Just think of how much you are losing out if you are paying out 20+ hours of overtime each week!!!

It's a psychological game we play with ourseives. We don't think we need to hire an additional worker. But if you run the math, you're stupid not to.

One last tip - here's what I do when I don't want to hire an additional employee. I set up the week so that the crews are working 4 days per week (typically Tues - Fri) and then I will only work them on Monday or Saturday if the job(s) we are doing has a profit margin that is high enough to warrant the increased cost in overtime. Otherwise, the job waits until the next week.

[jaclawn]

While the idea of bankrolling overtime hours into compensation for time not worked, is appealing to an employer, I as an employee would not be happy with that arrangement. Here is why:

Say, in April and May, I aquire 10 hours of OT per week, June, 5 hours, and Sept and OCt. 5 hours per week as well. These are realistic numbers based on OUR season, and may be different in other parts of the couuntry. That is a total of 140 OT hours per season. Now, the employer would be "holding" the money that I made all those months, then paying it out to me in Nov. or Dec. when the work slows or stops. Sounds great, but the employer is able to make interest off that money all season long. It may not be much, but mutiply it over several employees, and several years, and you just paid for your bosses Florida vacation.

Another thought, if you r employees are "laid off" in the off season, are they eligable for umemployment conpensation? If so, them getting a pay check from you for those weeks that you are paying them would disqualify them from recieving the unemployment benefits. At least that is how it works in out state.

I am also not sure of the legalities of this situation.

It is the same situation with most mortgage companies. They collect your property taxes, and sometimes property insurance premiums each month, place them in an escrow account, and pay your tax and insurance bill at the end of the year. They are making interest off this money, you can bet. It is your money, but you don't get the interest. They all claim that this is factored into the interest rate that they gave to you, but it is a high dollar portion of their business.

I also agree with the statement by jimlewis about only using OT on high dollar jobs. Our maintenance route is 3 or 3.5 days long, leaving the rest of the week for other work. If that "other" work is going to send us into OT, it gets billed accordingly.

[thelawnguy]

". It is your money, but you don't get the interest."

My mortgage co. credits my escrow account with the interest annually. 5.5%. Its the law at least in my state.

[John Allin]

Over our 23 years in business we've been audited by everybody (although not all at once, thank God). Feds and State can only go back 3 years when auditing payroll records. We currently have 70 people on the payroll doing landscape work, and our HR person participates on various local authorities/boards that work with the Bureau of Employment Security - and she attends the various seminars put on for people in her position. Not to mention that we ask lots of questions during audits so that we understand what the rules are and how they are applied.

What you are all describing is not legal. If you get caught, and a audit is really the only way that you would get caught, if you get caught you will have to pay the back wages owed for the week in question. The fact that you may have paid the employee for the back wages in a later week, or month, will not have a bearing on what the employee is owed for the week(s) in question. The auditor will tell you that paying an employee for time not worked (as in paying them the 'comp time' in winter) is nice of you, but has no bearing on the fact that you cheated the employee out of legal OT in the week it was earned. And make no mistake, it is considered cheating in their eyes. They will FORCE you to pay the OT (plus a nominal penalty to them for your ignorance). They will make you PROVE that you have then paid the employee. They will make you prove that you did a through search for the employee, and if you cannot find them they may escrow the monies owed so that when/if the employee surfaces they will then get the dough that they rightfully earned.

You are playing with fire if you do not pay them (your employees) their rightfully owed overtime as dictated by law. One complaint from a disgruntled employee is usually not enough to spark an audit. But several complaints could do it.

This is part of being in business. Yes, some rules make it difficult to operate. However, breaking the rules can often put you out of business altogether if you're not careful. Say what you want about overbearing governmental regulations - they still apply.

A good book to read that will assist in knowing these rules is "Hiring Independent Contractors - The Employer's Legal Guide" by Attorney Stephen Fishman, and published by Nolo Publishing. It costs $34.95 and is available at Barnes & Noble. While this book is for people contemplating using subs for work (we have just over 4300 subs in winter), it does a great job explaining what an "employee" is and what you must do to stay in compliance with the state and federal laws.

Touchy subject.... didn' t mean to irritate anyone.

[lsylvain]

You have to keep your employees happy. It is always going to take your employees longer to do things than it takes you. you might want to think about paying flat sallary with commision on the # of jobs they get done in a specified amount of time. This will give them encouragement to work faster and not to take the detours when driving to jobs.

I think the reason we are so much faster than our employees is that we don't get paid by the hour. So the faster we work the better we feel.

[LoneStarLawn]

It is not legal....simple as that...

[GroundKprs]

There is only one legal way around paying time-and-a-half for hours worked over 40 in one week. If you have only one employee, and your gross revenues are under $1 million a year, federal DOL regulations do not apply to your business. Dept of Labor wage and hour regs kick in only if you have two or more employees. Of course, if you are incorporated, you are probably the first employee, so the first person you hire puts you under DOL regs. You must verify with your own state if they have a similar threshold.

To pay "comp" pay later in the year as suggested above is completely against most state and federal wage and hour regulations. Some exceptions are made for special employment areas, like police officers in our city, but the are very rare in private industry. In some cases, even a "salaried" worker who consistently works over 40 hours a week can go to wage & hour and get compensation from the employer for overtime pay. Having an agreement with employees never overrides state and federal law.

And when you consider unemployment taxes, holiday pay, vacation pay, sick pay, and other benefits given to employees, the few overtime hours for present employees can be quite a bit cheaper than hiring another employee to avert overtime.

[John Allin]

Grounkprs Jim,
Our experience here is that your last paragraph is very close to the mark with regards to it being cheaper to pay some OT rather than hire another individual.... some that don't do the vacation, holiday and sick pay thing might find it to be abit closer/cheaper for them to just hire another front line production worker. We've done a cost analysis here, and we would rather pay the OT - although we have some strict guidelines in place for our managers with regards to how much OT is authorized. Once it gets past a certain level it becomes a burden that is hard to recover from the customer.

[CMerLand]

As others have stated the Comp time and fixed "salaried" employee are not legal in the state of New Jersey. I wish someone had told me that when I was 20 and screwed myself out of a hell of alot of overtime hours.

Secondly before going any farther, check with your own accountant and/or dept of labor to make certain that what follows is legal in your state. Everything below is typed directly form the NJ Wage and Hour handbook. For the record I have never used this pay method with any employees but may in the future.

REGULAR RATE OF PAY FOR FIXED SALARY FOR FLUCTUATING HOURS

An employee employed on a salary basis may have hours that fluctuate from week to week and the salary may be paid pursuant to an understanding with the employee that the employee will receive such fixed amounts as straight-time pay for whatever hours the employee is called upon to work in a workweek, whether few or many. Where there is a clear mutual understanding between the employer and the the employee that the fixed salary is compensation (apart from overtime premiums) for the hours worked each workweek, whaever their number, rather than for working 40 hours or some other fixed weekly period, such a salary is permitted by the FLSA if the amount of the salary is is sufficient to provide compensation to the employee at a rate not less then the applicable minimum wage rate for every hour worked in those workweeks in with the number of hours works is the greatest, and if the employee receives extra compensation, in addition to such salary, for all overtime hours worked at a rate not less then one half the employees regular rate of pay.

Since the salar in such a situation is intended to compensate the employee at straight-time rates for whatever hours are worked in the workweek, regular rate of the employee will vary from week to week and is deteremined by dividing the number of hours worked in the workweek into the amount of the salary to obtain the applicable hourly rate. Payment for overtime hours at one-half the hourly rate, in addition to the salary, satisfies the overtime pay requirement because such hours have already been compensated at the straight time regular rate under the salary arrangement.

GOT ALL THAT??? CONFUSED??? Thats legal speak for you. Anyhow it works like below. I have changed the numbers to make the math easier to follow.

You and your employee agree that the salary in the arrangement is $400 per week. Pay per week would be as follows:

HRS WORKED Hourly Rate( $400 / total hours) Overtime (hourly rate X 1/2)X(hrs>40) total pay (400+ overtime)

35 11.43 0 $400.00

40 10.00 0 $400.00

45 8.89 5 hrs X 4.45 $ 400 + 22.25

50 8.00 10 hrs X 4.00 $ 400 + 40.00

48 8.33 8 hrs X 4.17 $ 400 + 33.36

28 14.29 0 $ 400.00

I would like to hear from anyone using such a pay setup and to hear the pros and cons of its use. I also hope it transmits properly so the columns line up properly. Well looks like it wont but just kinda look at it and you can figure how the columns should look.

CMerLand

[John Allin]

Interesting....
I'm going to check into that in PA.

[Lawngeek]

its a cyclical business legally you dont have to pay overtime however ifthey are worth it then do it

[LoneStarLawn]

Originally posted by Lawngeek
its a cyclical business legally you dont have to pay overtime however ifthey are worth it then do it

Come again? You need to check your facts..or show us proof.

Copies of Wage and Hour publications may be obtained by contacting the nearest office of the Wage and Hour Division listed in most telephone directories under U. S. Government, Department of Labor or by calling their toll free number 1-866-4USWAGE.

The following are examples of employees exempt from the Act's overtime pay requirements only:

*Certain commissioned employees of retail or service establishments;
*Auto, truck, trailer, farm implement, boat or aircraft salesworkers, or parts-clerks and mechanics servicing autos, trucks or farm implements, who are employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers;
*Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans;
*Announcers, news editors and chief engineers of certain non-metropolitan broadcasting stations;
*Domestic service workers who reside in their employer's residence;
*Employees of motion picture theaters;
*Farmworkers.

Certain employees may be partially exempt from the Act's overtime pay requirements. These include:

*Employees engaged in certain operations on agricultural commodities and employees of certain bulk petroleum distributors;
*Employees of hospitals and residential care establishments which have agreements with the employees to work a 14-day work period in lieu of a 7-day workweek (if the employees are paid overtime premium pay within the requirements of the Act for all hours worked over 8 in a day or 80 in the 14-day work period, whichever is the greater number of overtime hours);
*Employees who lack a high school diploma or who have not completed the eighth grade may be required by their employer to spend up to 10 hours in a workweek in remedial reading or training in other basic skills that are not job-specific, as long as they are paid their normal wages for the hours spent in such training. Such employees need not be paid overtime premium pay for their remedial training hours.

The Act requires that covered employees, unless otherwise exempt, be paid not less than one and one-half times their regular rates of pay for all hours worked in excess of 40 in a workweek.

[Rooster]

Interesting discussion.

I talked to an I.R.S. employee whom I know very well. I put the situation to them about overtime. Several factors enter into the answer.

1. Be sure you are right.
2. Contact a GOOD accountant.
3. Double check everything.

Afterwards I call an Account who informed me that in the State of Kansas a Salary is based on 40 hours of work per week, Also for Federal Income Tax a salary is based on 40 hours of work per week.

That is from 2 different sources, take it or leave it.

I do know a few years back another city close to me, was sued by the Police Officers for working overtime and not getting paid for it. The case went to federal court and the city had to pay back wages and benefits for all officers in the department that worked over 40 hours a week.

[cajuncutter]

I know that several years ago, here in the state of Louisiana, that any agriculture (farmming) job did not require the time and a half rate hike when someone gets overtime. LCO's fall under the agriculture job list here. I found this out working for a company years ago. I do not know if it is the same or not but you may want to check with your state requirements. There may be a loop hole preventing federal regulations to require the time and a half hike. This could save you bucks but eventually may piss your employees off. Good luck!!

[ChadsLawn]

This is what my Dad use to do when he had his lawn service.Pay them salary.Base it on a 40hr week at whatever you pay them per hour.If its $320 per week..then that what they make yr round.