View Full Version : Legalities with OverTime & Labor

DFW Area Landscaper
01-18-2004, 01:53 PM
I was just wondering if this would be legal:

Pay the employee the minimum wage but offer a bonus program of several hundred per week for showing up on time and being available to work the full week.

Would that be legal?

The minimum wage is $5.15 per hour. In 40 hours it would be $206.00. Say you bonus another $225 on top of that for total pay of $431 for 40 hours of work. That comes out to $10.77 per hour.

But if the employee works 50 hours during the week, he'd get 40 hours at $5.15, 10 hours at $7.73 and the bonus of $225.00. He'd make $508.25 for an hourly rate of $10.17 per hour.

Would this be legal? When I worked for Chemlawn 14 years ago they paid in a similar manner. As I worked more hours during the week, the pay per hour went down and they saved a bundle on overtime. It was referred to as Chinese overtime by everyone who worked there.

One other question: If it's drizzling in the morning and it's too soggy to mow but it's July and things will be dry enough to cut with as little as a 1/2 hour of sunshine, what do you do with employees? If they hang out around the shop drinking coffee, are they on the clock? Or do you send them home and tell them to call you in an hour to see if they need to work? How do you handle this and stay legal?

PS: Please don't relocate this to the elements of business forum. More people will view and resond here. Thanks.

DFW Area Landscaper

01-18-2004, 02:11 PM
I don't know if you know this, but G.W. Bush is trying to do away with overtime pay. Maybe in a year you won't have to worry about it.

I would call a labor lawyer and see what he says.

I believe Chemlawn pays a salary now with commision. They changed the bonus to a customer retaining bonus. If you don't lose more then a certain percentage of customer on your route you get the bonus. The bonus is paid monthly. They still call it chinese overtime when they make saturday mandatory work. By the way, My brother-n-law (which is living with us at the moment) works there. He's got a fat route and makes decent money.

Critical Care
01-18-2004, 02:55 PM
Regarding your second question... I wouldn't suggest this, but I worked for a company that used "red cards" which were additional time cards for employees to record overtime hours. These overtime hours were accumulated and then used as regular working hours during those rainy days when the employees couldn't work.

This company also had a bonus program that was based upon a performance list that was reviewed monthly by the supervisor. It contained such criteria as learning points, getting to work and out of the yard on time, achieving a high daily pay to non-pay hourly ratio, education, and more. It was a good idea, but the employees hated it. Nobody knew what they were making, it was too subjective, and in the quest for better effeciency it caused problems with safety and cheated clients out of better service. Bottom line was that the bonus program was scrapped and life became more enjoyable, and honest.

01-18-2004, 02:58 PM
Basically any pay plan is legal as long as you pay equivelent to time and half for overtime hours. The FLSA classifies overtime as hours worked beyond 40 hours during a seven day period. The person's hourly rate for this computation is his normal rate of pay. There are a number of court cases dealing with "bonus". Generally a bonus is some form of pay that accrues for going beyond some standard. Hence, I believe a case would fail, and the bonus would be deemed part of the employees regular hourly pay, if the employee merely got the bonus for working a 40 hour week. In my opinion, it's sound like too much of a prima facia case of rigging the pay plan to illegally circumvent overtime premium.

DFW Area Landscaper
01-18-2004, 03:16 PM
Well, the way Chemlawn handled this may well be the best way to handle it. When I worked for them, they paid me $310.00 per week as a salary. That $310.00 covered all hours worked during the week.

If I worked 40 hours or less (and I never worked less than 40 hours), they paid me $310, which worked out to $7.75 per hour.

But when I went over 40 hours, that's when the "chinese overtime" kicked in.

Here's how they paid a 50 hour work week:

$310 divided by 50 hours equals $6.20 per hour.
$6.20 for first 40 hours equals $248.00.
$6.20 times 1.5 for 10 hours equals $93.00.

Total pay for 50 hours of work: $341.00.

In all reality, they were paying $31.00 for the ten hours of over time I worked, which is $3.10 per hour.

I remember I called one of the government agencies, probably the Department of Labor, and they told me it was legal.

DFW Area Landscaper

01-18-2004, 03:50 PM
There's no way around overtime pay. Legally, you MUST pay time and a half for anything over 40 hours. There are some exceptions but unless you own a farm and they're working on the farm all day, and it's seasonal these exceptions don't apply to you.

So you have to pay him at least 1.5 times his regular pay for overtime. If you want to throw in a bonus beyond that, fine.

If it were me, I'd just make the bonus variable. Some weeks, when he just got 40 hours, the bonus would be $225. Then, on weeks where he got 50 hours, the bonus would be a little smaller. But I'd just tell him that with wages and bonus, he should expect to make at least $431 per week. Sometimes more. And like you said, I'd make the bonus contingent upon his good performance.

Kelly's Landscaping
01-18-2004, 04:14 PM
Damm some people are cheap. I wonder if you care about the quality of your workers or is it just a question about live bodies.

I shouldnít even tell you this as I donít believe in it and I always thought it made her an absolute scumbag of an employer. But when Martha Stewart was sued several years ago for over time pay. She was paying a guy 15 an hour straight time and working him on call 60-80 hour weeks he sued for over time. Which he felt as I felt he was entitled too. Christ sheís a billionaire and doing this. Well she won the judge ruled that the guy was a legal not illegal but a legal alien a NON CITIZEN. And there for labor laws such as over time did not apply to him so not only did he lose his case he also lost his job and she had him deported as well I hope she loves those stripes she will be wearing soon. But there you have it if they arenít citizens then you do not need to pay over time if they are pay the over time and be thankful they donít read how your really feel about them.

Richard Martin
01-18-2004, 06:25 PM
And some people wonder why they can't find good American help.

01-18-2004, 07:38 PM
You wont have to ask if someone wants to work Saturday. You will have to tell them. Not looking for the happy employee are we?

01-18-2004, 08:17 PM
Overtime pay is not mandatory in New Hampshire for seasonal landscape companies who meet a few criteria like amount of sales as well as % of sales in a certain amount of months. For those of you who think it's unfair, paying our starting mowers at $14 an hour to drive air conditioned late model trucks and sit on $10,000 mowers seems unfair to me but I pay it. The last thing I will do is pay time and a half that would calculate to about $21 an hour for this work is unimaginable. I make $13 an hour driving an oil truck off season to keep busy and the responsibility is far greater. So once again, check your local laws regarding overtime.


01-18-2004, 09:35 PM
I suggest reseaching the matter beginning with the following

website http://www.dol.gov/esa/regs/compliance/whd/whdfs23.htm

DFW Area Landscaper
01-18-2004, 11:28 PM
From the DOL websight:

Salary for Workweek Exceeding 40 Hours: A fixed salary for a regular workweek longer than 40 hours does not discharge FLSA statutory obligations. For example, an employee may be hired to work a 45 hour workweek for a weekly salary of $300. In this instance the regular rate is obtained by dividing the $300 straight-time salary by 45 hours, resulting in a regular rate of $6.67. The employee is then due additional overtime computed by multiplying the 5 overtime hours by one-half the regular rate of pay ($3.335 x 5 = $16.68).

I think what Chemlawn was doing when I worked for them was exactly this. Only the base weekly salary covered the actual number of hours worked during the week. I think they called it the fluctuating work week. We called it chinese overtime.

DFW Area Landscaper

Richard Martin
01-19-2004, 06:14 AM
The example that DOL gives is not the same as the way Chemlawn was paying you. The key difference is the way DOL says "A fixed salary for a regular workweek". with regular workweek being the key part. It does not say that you can increase the workweek and leave the salaried pay the same. I think you are confusing your definitions of salary.

A lot of people these days don't think of the word salary when they get paid or are paying someone. But at one time this was how everybody thought of being paid. They would say that they were getting a salary of 100 dollars for a 40 hour workweek.

The common usage of salary now is in reference to management. When someone is hired as management you are allowed to pay them a fixed salary with variable hours.

Chinese overtime is a mix of the two methods of pay.

How did/does Chemlawn get away with mixing the 2 types of pay? Legally they don't. But the DOL usually won't do anything unless large groups of people complain (as in McDonalds' case) or someone files a class action lawsuit (as in Walmart's case).