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salary or not?

Discussion in 'Business Operations' started by cklands, Mar 16, 2003.

  1. cklands

    cklands LawnSite Senior Member
    from MA
    Messages: 360

    Here is my question. I run a small but profitable business. I have two employees and myself. Will probably need a third this season. My foreman, who has been with me for 4 seasons is now getting married. So we all know what that means, mortgage, kids and everything else. He has always been paid by the hour, at a decent wage. He had asked me about going on salary this season for budget reasons. I have big plans for him in the company as it grows and don't want him to start looking. The only problem is that he had thrown out that he would be interested in salary plus OT. He did say that he would not want a raise in pay (which I give evry season). Well wouldn't we all.
    I went back through payroll from last season. For the most part he put in his 40 (with the exception of rainy days) and had 35 hours of OT for the season. Here is what I am thinking. Give him a little raise, pay him salary for 40 hrs a week. Put his OT in the "bank". At the end of the month give him an extra check for HALF of the OT hours. That way he gets a little extra check every month and he will still be motivated to put in the hours. I will also get a little back for the weeks where he does not put in 40 but still gets paid for 40.
    Any other thoughts or suggestions?
  2. osc

    osc LawnSite Senior Member
    Messages: 502

    Better check with your state on that. Make sure what you want to do is legal.
  3. Lazer Man

    Lazer Man LawnSite Member
    from SW Pa.
    Messages: 9

    You say he is a good worker. Then I'd go for the salary as long as he understands the salary is based on what his past pay was just divided up to be payed to him all year long. To me the overtime is really an not an issue if all he had last year was 35 hrs that only comes to alittle over an hr per week, unless he has a alot of weeks he works under 40hrs, you did not specify that figure. I'm a salary employee my salary is based on a certain time period from mid March through the first week of Dec . We also do snow removal during the winter months but for that I'm paid an hourly rate plus my normal salary. This set up works well for me' just remember that in order to keep good employees they have to be able to make a decent living or else they have to look elsewhere then who really loses. Hope this helps out.

    Bob:D :D
  4. nelbuts

    nelbuts LawnSite Bronze Member
    from SW, FL
    Messages: 1,053

    Don't do it. If he is on salary there is no over time. He is what I use to do and it was upheld several times. I had 22 workers. They all had titles and all were on salary. In the summer they usually worked about 40-45 hours per week. In the winter here they worked from 30-35 hours. They got the same pay. If they made it a year 1wk vacation, 3yrs. 2 wks, and 5yrs. 3wks. They were offered 1/2 paid medical. All crew leaders drove the company trucks home and could use the equipment on their own property on off days. In fact anyone who worked for me could cut their own property as part of the daily schedule if it was close to our route. Get this still couldn't keep people! So now it is me and a part-timer. As I fired them all!!!
  5. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    The nice thing about running a small business is that you can be reasonably flexible when you need to, unlike large corporations. This is one of the reasons many people like to work for small companies.

    Custom tailoring someone's compensation isn't a bad idea as long as it's lawful. Last thing you want is the government snooping down the road when someone complains about you for no other apparent reason then the fact that they are ticked off.

    If you pay the salary, here is how we do it.

    Count total hours expected to work for the year based on previous years information for the person or for similar position, count overtime and regular hours.

    Our foreman will work about 2100 hours a year, 1800 regular hours and 300 overtime. Take their hourly rate and do the math. Determine what days are will be taken off (holiday, etc) and what days will be worked. We work year 'round M-F. Saturday only if we must. January/February we work 4 day weeks, taking Friday off. We take Wed - Fri off Thanksgiving week, a week off between Christmas and New Years and other major holidays (Memorial Day, Fourth of July, Labor Day, Thanksgiving, Christmas, New Years).

    At the end of the year add up the hours worked and compare that with what you budgeted. If the guy works fewer than scheduled, we don't do anything other than let the guy know he worked fewer hours than scheduled - it's to his benefit. If he works more than scheduled than we evaluate if he needs to be paid more to make up for more hours worked. If it's more than 3 or 4% over in hours, we'll pay it. If it's less than that, it's a wash. But we take this into account for the upcoming season. So we might then calculate the salary on 2150 or 2200 hours instead of 2100.

    We agree to this arangement in writing and discuss it openly. There are no secrets - nothing hidden. We avoid resentment this way and the employee knows he's being paid fairly - he's just receiving his compensation in even monthly payments as opposed to the roller coaster ride of a normal hourly paycheck.
  6. adrianvbarrera

    adrianvbarrera LawnSite Member
    Messages: 163

    Be careful when setting employees up on Salary.

    A great misunderstanding exist that states that overtime does not exist for employees on salary. Industry wide abuse has been done for years and just recently is coming to light. Don't be surprised if class action lawsuits all of a sudden will come up against employers who have not paid overtime for salaried employees.

    Now keep in mind that these rules of overtime vary greatly from state to state. PLease check your state laws.

    Just my thoughts.
  7. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    I don't think what most of you are doing is legal. Even adding up the hrs as per lawnlad, unless there is an hourly rate attached to them so the real pay could be calculated could be illegal.

    In addressing the original question lets define the employees request. Sounds like, but needs to be clarified with him, that he wants a garrenteed 40 hrs plus be paid OT over 40. If that is the case don't read anyting extra into it. Find a way to keep him productive such as servicing equipment, calling customers or what ever duties you have planned for him in the future. If he also wants more OT to earn more dollars what he is saying about not wanting a raise doesn't fit. You don't want him doing busy work just to satisfy his hourly desire.

    Example: You can pay a salary to hourly employees by saying that the salary is for 50 hr per week consisting of 40 hr @ $10/hr and 10 hr @ $15/hr for a total of $550. But you gotta pay the $550 every week. And you gotta pay him another $15/hr for any hrs over 50. If he only works 39 one week, tough it is on you.

    But if a guy wants a salary of a certain size you can do the hour calcs working backwards to get the hourly rate you want to use to give him the weekly dollars he wants.

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