pay workers hourly or salary

Discussion in 'Business Operations' started by JML, Dec 17, 2002.

  1. JML

    JML LawnSite Senior Member
    Posts: 415

    I pay our guys hourly. I was thinking about switching them over to salary, save a lot of time on payroll, don't have to worry about 15 mins, here 15 mins there. I was just wondering what you guys use, and what do you think of it? thanks
  2. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    We pay hourly in increments of 1/4 hours. Only one person on the payroll that is paid salary. You guessed
  3. bubble boy

    bubble boy LawnSite Bronze Member
    Posts: 1,020

    none on salary yet. but i have a couple "good" employees that i will offer it to in the spring . prob here is that hourly workers have little (snow) or no cash flow in the winter. so often they start listening to other offers as the season dies down.

    one guy has asked for salary. when i asked what he was looking for he said lets just figure out what i would make in the summer, add the (lesser) amount from the winter and then divide it up evenly over the year. in other words he is just looking for smooth cash flow. Now we all know if he could budget there is no reason to need to be on salary. but he needs the forced budgeting.

    the way i see it it costs me approx. the same per annum, yet this guy has some stability. and so do i, as his chances of returning the folowing season are much higher.
  4. GroundKprs

    GroundKprs LawnSite Bronze Member
    Posts: 1,969

    If you are considering salary for everyone, be aware that wage & hour will consider that salary figure for a 40 hour week:

    If you are paying someone $400 salary, that means he is getting $10/hr. So he works 35 hours this week, and 45 hours the next, it's a wash, right? NO!!! The 45 hour week is figured at $400 for 40 hours, time and a half over that. So that week is $400 + 5x$15 = $445.

    Of course, you might get away with it if nobody ever complained. But if someone does, they go back years to correct your payroll. A nearby lawn business had one ex-employee complain to wage & hour about a similar salary situation back in mid-80s, and it cost the business $70,000 in back payroll.

    You can legitimately pay a salary for someone in a supervisory or managerial position, but more than half (I think it's half) his time must be spent on managerial duties. Example, a crew supervisor, who goes out and works with the crew: if his labor time is more than half total time, you cannot put him on true salary.
  5. bubble boy

    bubble boy LawnSite Bronze Member
    Posts: 1,020

    i'll have to check beforehand. thanks
  6. GroundKprs

    GroundKprs LawnSite Bronze Member
    Posts: 1,969

    Hey, bubble, I'm not versed in Canadian law. My comments were for USA guys. Wage & hour regs may vary some from state to state, also. But DOL also gets involved in employee overtime regs, I think.
  7. bubble boy

    bubble boy LawnSite Bronze Member
    Posts: 1,020

    i know. i always have to translate what i read here into canuckese:cool:

    i figure best to check so i'm set up right.
  8. stslawncare

    stslawncare LawnSite Bronze Member
    from DE
    Posts: 1,484

    to avoid various issues and i think it would be easier, stick with hourly, thats what i do.
  9. groundkprs

    In your example: 45 one week equals 40 @10 and 5 @15 for a total of 475 and the other week is 35 @ 10 for a total of 350

    Grand total of 825 instead of 800

    The key is to keep good track ofhours worked etc.

    My salaried guys sometimes take off for dentist etc.....

    That is not in the course of a normal work day therefore they could be docked for it. If they ever came and audited me on the salaried guys because one of the salaried guys complained........they would owe me money!

    We average approximately 43 hours per week over the course of a year which includes major down time around the holidays etc....

    If push came to shove, I'm sure I would get slapped on the hand, but I don't think I would owe any money. You are allowed to overpay someone....therefore on the weeks they worked 20 hours but got paid there salary for 40....They would owe me money. I think it would be a wash.
  10. GroundKprs

    GroundKprs LawnSite Bronze Member
    Posts: 1,969

    Thanks, Tony. Will use this winter to review third grade math. LOL. Should have been $475.

    But, at least here, a 35 hour week and a 45 hour a week are not a wash to wage & hour. The 45 hour week is 5 hrs time and a half, even if the sandwiching weeks are only 20 hours. I also believe DOL looks at it this way, too.

    Even in your situation of avg 43 hours, you could pay $445 salary each week (40@10+3@15). But if the bean counters come in, they don't care about averages. What matters is what's really on the time cards. And you don't even want to see them if you don't have time cards, or some record of work hours.

    There are special situations, either defined by statute (policemen and firemen here, I think), or by adopting special work hours under union and/or special regs (certain factories around us run 12 hr shifts up to 5 days straight, but have lots of days off).

    If one is so confident of his policies, but wants to really be sure how the regulators might view it, wage & hour and DOL will gladly meet with you and criticize your system. I went to them when I was setting up for employees years ago, and they were very helpful. Even approved a wild bonus system I proposed.

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