# employees & overtime



## Everend (Jun 11, 2010)

I've had employees before, 18months ago I downsized to working alone. I am developing a groth plan for hiring in the future (once I get some things figured out so I don't make the same mistakes again). One issue I have to solve is paying a livable wage for quality employees vs overtime. 
As I understand it, if I tell him when to show up, how to do the work, supply tools or pay hourly that person must be a W2 employee and not a 1099 sub. 
I also understand that if that employee clocks in for more than 40 hrs / wk I must pay overtime. 
So the problem I've had is that some weeks we need to leave work undone to stay under 40 hrs, other weeks we are stressing to find work to keep everyone busy. My bids and hrly rate to clients cannot afford overtime rates. 
The result is that my guys were usually a little under 40 hrs and sometimes way under, on a slow week. 
I want to build a business where each employee is at least comefortable with their income. 
So far it hasn't worked well for me in practice. How have you been sucessful juggling customer demand vs employee income vs overtime vs bids/hrly rate paid by customers?


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## Inner10 (Mar 12, 2009)

Everend said:


> I've had employees before, 18months ago I downsized to working alone. I am developing a groth plan for hiring in the future (once I get some things figured out so I don't make the same mistakes again). One issue I have to solve is paying a livable wage for quality employees vs overtime.
> As I understand it, if I tell him when to show up, how to do the work, supply tools or pay hourly that person must be a W2 employee and not a 1099 sub.
> I also understand that if that employee clocks in for more than 40 hrs / wk I must pay overtime.
> So the problem I've had is that some weeks we need to leave work undone to stay under 40 hrs, other weeks we are stressing to find work to keep everyone busy. My bids and hrly rate to clients cannot afford overtime rates.
> ...


I just pay time and a half overtime for anything over...alternatively you could have them bank their hours and payout on a slow week.


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## Everend (Jun 11, 2010)

I didn't think banking hours is legal


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## Warren (Feb 19, 2005)

Inner10 said:


> I just pay time and a half overtime for anything over...alternatively you could have them bank their hours and payout on a slow week.


No you can't. Where I use to work, this was done voluntarily, and eventually someone contacted Federal Wage and Hour. They ended up paying thousands of dollars in past due overtime.


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## Warren (Feb 19, 2005)

We have been pretty successful just working guys 8 hours a day, five days a week. Occasionally, an extra hour or two of overtime is not a huge financial issue. There are also times that a customer has paid an additional cost to have people work overtime to speed up the job. Yes there are weeks that are under forty hours due to schedule, weather, etc. Pay your guys a decent wage, and a few hours over/under here and there are no big deal.


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## Everend (Jun 11, 2010)

I should point out that my business is mostly smaller jobs for homeowners or property managers at occupied residences. This means we may have several jobs in one day that need to be scheduled days in advance. So if something doesn't go to plan, the schedule suffers, most often cutting hrs short or going into overtime to finish. 
If a customer cancles I had to scramble to try to fill hrs. 
Working alone this is not a problem since I am happy to have a little extra time with my family on some days or work late on others. Overtime pay never comes into it since it does average out over several weeks. I keep a little retained earnings in savings so the money averages out. The problem is with employees, the govt won't let us avg out over several weeks.


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## Warren (Feb 19, 2005)

This is the conundrum. If you want to expand, you will probably need to seek out better paying jobs. This will allow you some flexibility in paying someone a higher wage to negate the hours missed. Start with one guy and see how it goes. Tel him that you expect that he will average about 35 hours per week over a 3 month period. After that, reevaluate and see how things stand. It has been preached here many times. Having more guys does not always equal greater profitability.


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## Everend (Jun 11, 2010)

I'm well aware more guys doesn't mean more profit. I've made more as a one-man-show than before. The problem is that it is not a long term plan (at least not for me). I'm more of a business kind of guy than a field craftsman. I can and like doing the field work, but my mind is always looking to the future. I am going to continue working alone until I find solutions to the problems I had last time. It will take some time, maybe years to get the plan right, but my brain won't let me stop working on them. 

I believe I'm already priced at or near the top of my market. I believe there is a way to manage this right, so it does work for everyone, now I'm trying to turn that faith int writing.


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## Everend (Jun 11, 2010)

I do like the idea of hiring on the promise of an average of 35 hrs.


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## Inner10 (Mar 12, 2009)

Warren said:


> No you can't. Where I use to work, this was done voluntarily, and eventually someone contacted Federal Wage and Hour. They ended up paying thousands of dollars in past due overtime.


You sure can in Ontario, you just have to bank the hours at 1.5x and have a written agreement in the employment contact.

Also in ON it's 44 hours.

http://www.labour.gov.on.ca/english/es/tools/hours/overtime_tutorial.php


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## Warren (Feb 19, 2005)

Inner10 said:


> You sure can in Ontario, you just have to bank the hours at 1.5x and have a written agreement in the employment contact.
> 
> Also in ON it's 44 hours.
> 
> http://www.labour.gov.on.ca/english/es/tools/hours/overtime_tutorial.php


Not sure where the op is. Many here in the U.S. have tried this and acted like everything was legit.

To the op:
What about working someone 10 hour days? This might help them achieve a 40 hour week, and potentially have an extra day off. Win win.


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## Everend (Jun 11, 2010)

Texas

We did try to work 10 hr days as much as we could, that gave us Friday to use as a make-up day if we got rained out or a customer needed to reschedule. It also gave me a day to get some paperwork done when I wasn't being interupted.

The more I think about it, the more I like the idea of targeting 35 hrs a week. Setting the hourly rate based on that as full time. This way they can make what they need to live each 35hr week and if they can get a couple more billable hours that week, that's a little extra discretionary income for them that week.


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## kiteman (Apr 18, 2012)

Sometimes a little overtime is not the worst thing, compared to an extra trip plus roll-out/up time. If you have work comp, you don't pay for it on the over portion. That saves at least 10%.


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## tedanderson (May 19, 2010)

A guy that I used to work for always had "busy work" for us between the real jobs. There was a trailer park where the owner had more time than he did money so we had an ongoing project where we were renovating the dilapidated clubhouse. 

The boss would sometimes send us out there at the end of the week to round out the hours, and other times we would be out there every day until the next project was ready. He billed the owner for T&M and by the time we got back over there again, he had an opportunity to generate enough cash to pay my boss the next installment.


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## Warren (Feb 19, 2005)

kiteman said:


> Sometimes a little overtime is not the worst thing, compared to an extra trip plus roll-out/up time. If you have work comp, you don't pay for it on the over portion. That saves at least 10%.


Wc here is paid on ot, vacation pay, bonuses, etc. There is max wage per week, but only a lead guy would ever hit that, and only after several ot hours.


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## Pearce Services (Nov 21, 2005)

I have thought about the real cost of overtime for a while, and struggle with how to value the actual cost of OT.

I figure all my overhead on labor (loaded labor burden). If I pay a guy $20 per hour, his labor burden for my business is around $43.40 per hour. So logically, my OT labor burden should be $43.40x1.5 or $65.10

So at the end of the year, all my overhead is covered by the regular hours worked. If a tech works 1 hour of overtime, can you justify your cost for that hour to be the rate times 1.5 or in this case $30 per hour, plus payroll costs (ins ui etc) $7/hour and what ever overhead has been incrementally increase for the hour of labor ie. tool/vehicle expenses maybe $5.00 per hour, for a total burden of $42/hour.

I sometimes feel that the real cost of overtime is less, am I missing something?


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## Everend (Jun 11, 2010)

The only offset to the extra cost would come if you are compairing staying late on Friday to finish the job that evening or driving back out there on Monday. By finishing on overtime on Friday, you can get paid (or send the invoice) on Friday earlier and it eliminates another trip to the jobsite.


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## TimberlineMD (Jan 15, 2008)

Everend said:


> I didn't think banking hours is legal


It isn't.


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## kyle_dmr (Mar 17, 2009)

Inner10 said:


> You sure can in Ontario, you just have to bank the hours at 1.5x and have a written agreement in the employment contact.
> 
> Also in ON it's 44 hours.
> 
> http://www.labour.gov.on.ca/english/es/tools/hours/overtime_tutorial.php


There is also an article in ONT that states if both parties are in agreement overtime can be set at a different rate than 44 hours. I Have mine set to 50 hours a week. During summer hours that is easily reachable in 4+ days, let alone working weekends. I have employees sign and date a new employee info sheet including hourly rates/pay period info including this once per year, as per the governments request.


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## KennMacMoragh (Sep 16, 2008)

If I have to work a couple hours overtime to get caught up its not a big thing. Maybe you need to raise your prices? You're talking raising your markup 3 or 4 percent to account for that overtime? Would that make you lose sales?


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## Calidecks (Nov 19, 2011)

Everend said:


> Texas
> 
> We did try to work 10 hr days as much as we could, that gave us Friday to use as a make-up day if we got rained out or a customer needed to reschedule. It also gave me a day to get some paperwork done when I wasn't being interupted.
> 
> The more I think about it, the more I like the idea of targeting 35 hrs a week. Setting the hourly rate based on that as full time. This way they can make what they need to live each 35hr week and if they can get a couple more billable hours that week, that's a little extra discretionary income for them that week.


Don't know where your located, but if its Cali you will have to pay OT on anything after 8 hours regardless of what they work a week.


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## flashheatingand (May 3, 2008)

A thought is, you can pay salary, and, when you bid jobs you can tell the customer "The job cost W. It should cost X, but if you tip my crew, I will bill you at W"

There are no guarantees. Heck, there could be some stiffs out there. But, in my experiences, 99% of customers want to be fair.


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