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adrianvbarrera
03-26-2003, 01:20 PM
Has anyone tried this method of compensating employees.
One of my businesses (not related to lawnservice) does this and it works out perfect.

What would be the advantages or disadvantages?


Adrian

lawnMaster5000
03-27-2003, 04:06 PM
Disadvantage:
The employees would spend less time on each lawn knowing they will get paid same amount no matter how long they are there. In my mind this lowers quality as emplyees rush through projects so they can go home. With hourly wages the more time they spend on a project the more they will get paid.

however, if you feel that your employees are taking an excessive amount of time to complete a project than this may be worth while for you. As long as you are providing the equipment it should not be classified as subcontracted labor, but you should double check that as well.

adrianvbarrera
03-27-2003, 04:40 PM
Let me think about that for a while.

Thanks for the input.

dforbes
03-30-2003, 12:13 PM
This can work well with the right employees. First you need to set some ground rules, such as if its not done right and we have to go back, you go back on your own time. I once set up a credit system. I figured out how many $ was budgeted for each property the set it up where the forman would get $9.00 per credit and laborers would get $7.00 per credit. This works well if you have employees that want to make more money and are willing to work a little harder for more money. Quality was also good with few problems. Then I got some people who thought they coulln't make any money this way so a whole crew quit. Put me in a bind but I got through it. Them quiting was best because they didn't want to work anyway. I am still working the bugs out and intend to implement this again in the future.

roscioli
03-30-2003, 12:34 PM
I am also interested in this method, would love to see the responses. I was thinking a mix of traditional hourly pay and piece work would probably be the way to go, but I can't figure out a good mix.

mdvaden
03-30-2003, 12:59 PM
You may have to weigh it out in light of wage laws?

Will it be commission, salary or hourly? Do you have to stick to one method of pay?

Lawns take longer some months, and almost no time later.

So employee shifts would be small on the pay per lawn system in November (Oregon), but very long during March to May when grass grows viciously when its wet with rain.

What happens when the work shifts exceed 40 hours in a week?

Do you have to pay overtime?

Or do you have to go pure commission status to get around that?

What if you need them to do a barkdust project on Tuesdsay, and how does that relate to the whole picture?

If they go slower due to failure on the owners part to maintain equipment or whatever, what check-and-balance will be included to keep the playing field fair for them, and still allow the employer to take consequences for poor management decisions?

Clay
03-30-2003, 01:00 PM
This is a very good thought process as it lends itself to two of J.Paul Gettys principals for success (own your own business and pay your associates based on productivity instead of a time clock)...

They are in a way subcontracting for you (business ownership) and they are getting paid based on "performance"....

Sounds like you are heading in a good direction.... It could also be set up as "profit sharing" so they are actually part owner and then would be more inclined to cut costs and improve quality... :-)

Good Thread... Clay

Fvstringpicker
03-30-2003, 07:38 PM
My understanding that the FLSA apply. If so, You'll have to pay at least minimum wage and overtime for over 40 hrs/7 day period.

dforbes
03-30-2003, 11:54 PM
These are all good points. I coded these jobs piece work. Any extra work has its own set of credits. also the best thing for the employee and you is that they get the same pay each week, for each job. They realize it will take a little more time in the spring and fall but in the summer, when its hot they can skate through it.
Also if you go to the federal labor website and do a search, we do not legaly have to pay overtime unless we do at least $500,000 in business. As I said before, with the right employees this is a win win situation. Time for equiptment maintenance is figured into the formula so there are few major breakdowns, If there is a problem because of a breakdown we can work it out. The guys spend a lot less time at quick stops because its their time
Dennis

65hoss
03-31-2003, 08:40 AM
It works really really well. Employee makes more money, get more work done, and the quality went WAY up. Win-win situation.

Employee is invested in the job. You lose the job, they lose the pay. Pretty simple theory. Since they will be making more money based entirely on performance they take pride in the job. Not everyone is up to this type of thing, but most are. Especially if you can explain it to them.

kels
03-31-2003, 08:47 AM
Since I have started, I have paid my helper a percentage of gross as far as taxes I list as contract labor, send a 1099 and be done.

This method works very well for me.

bruces
03-31-2003, 10:02 AM
Originally posted by kels
Since I have started, I have paid my helper a percentage of gross as far as taxes I list as contract labor, send a 1099 and be done.

This method works very well for me.

It works, but it is not legal. There is probably no way that your helper is not an employee. If you are audited by the IRS or state agency, you will lose!

Then you will be liable for back taxes. Or, your employee will quit or you will fire him and they decide to file for unemployment.

Then the state will check their records and find that you aren't filing employment tax returns.

You can do anything you want, but that doesn't make it right.

adrianvbarrera
03-31-2003, 11:30 AM
Kels,

I am sorry but Bruces is right.

There is a list on the IRS web site to determine if he is contract labor or and employee.

I have not figured a way to NOT classify a Lawn Care helper as Contract labor.
From what I understood for him to be a contract Labor for you he has to have some exposure to LOSS. Also he must provide his own equipment and his own materials for a job and YOU should not have to tell him how the work is going to be executed. Another thing would be that he does work for other LCO not just you.


To me that is hard to expect from a helper.


Please do check up on that with a knowledgeable CPA because the last thing you want is the IRS knocking on your door asking for back taxes.

Just my thoughts.

Adrian

Shuter
03-31-2003, 07:39 PM
The quality of the work my go down while trying to increase production to make more money.

adrianvbarrera
03-31-2003, 07:51 PM
Well,

I own an Auto Repair shop and my employees/mechanics work on a per job wages.

Productivity has gone up because if the work is sloppy they have to do it all over again at their expense.
The down thing about it is that in reality you are actually paying them more than you would normally do.
Being that Auto Repair is not on contract to be done every week it is advantageous for us to have them on this system because when it gets slow......wages don't eat me up.
Some of my techs make over $1000 after taxes per week.
It also keeps them more motivated because if they hustle and do quick accurate work they reap the benefits and they see it in their paychecks. When they miss a day it hurts them alot too.

Just a thought.
Adrian

MacLawnCo
03-31-2003, 08:08 PM
Adrian, thanks for jogging my memory.

I used to detail at an auto collision repair shop. Every guy there(except for me and the bosses) was on a nifty hourly rate. It went like this:

The estimator would submit his estimate to the insurance(which was grossly overinflated), the insurance would accept it, and the techs would get payed how ever much the job was estimated at. For instance, if there was a hail job that was estimated at 3.5 hours for body work, the tech would get 3.5 hours pay regardless of whether it took them less or more time. Frequently, the techs would rack up 60+ hours per week while only working 8-4:30. The bosses profit because they get X profit per hour, and the more hours the guys worked, the more they profited. The techs were thrilled they got payed for 60 hours of work while only being there 8 hours. It worked out well that way. Im not sure of call backs, but im pretty sure it was on the employees time.

This would work well for lawncare since upon estimation, you know how much each lawn is going to take and thus cost.

adrianvbarrera
04-01-2003, 10:44 AM
Yes,

I believe the system is called FLAG HOURS.




Adrian

Fvstringpicker
04-01-2003, 08:11 PM
we do not legaly have to pay overtime unless we do at least $500,000 in business.


Better not count on this FLSA overtime exemption. Although the FLSA applies only to annual sales totaling $500,000 or more, you get in trouble when you are engaged in interstate commerce.
----A lot easier than it seems. I had a client who lost a court case due to the interstate commerce provision because the court very broadly interpreted the term "interstate commerce" . In this case the court ruled that the client regularly used the U.S. mail to send or receive invoices and to order materials to and from other states and was therefore "engaged in interstate commerce". He paid triple damages for unpaid overtime even though his sales were less than the $500,000 floor.

roscioli
04-01-2003, 08:33 PM
Fv- That is completely true... Interstate commerce, and a number of other provisions in that law, are all designed to be interpreted broadly, just as you say. A percentage of materials coming from out of state, any sort of thing like that, will get you NAILED.