# Paying Hourly & by the Job????



## tlcarri (Jun 6, 2011)

we have employees (all are hourly) they all are asking for raises(yeah right :laughing but they get there raises by taking to long on the job sites. 

My question: is there anyone that has any luck doing hourly and job bonus. or paying by the job instead. 

such as....tell them that a job has x amount of hours and dollars, and no matter how long they take that is the amount they get. will this work. and is there a way to do it legally?


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## PARENOS (Nov 24, 2008)

Legal, I don't think so. Your best option would most likely offering job bonuses for each job that gets done on your time line. This way if they are able to work to your expectations, they can earn more money. Just make sure these time lines are realistic, you can offer all the bonuses you want, but if they are unachievable, you are better off not offering them at all, just make sure the quality does not suffer.


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## Warren (Feb 19, 2005)

Asking guys to work faster with the incentive of a bonus, will result in inferior work. In the past, when things were rolling well, I would sometimes give my top guys cash bonuses when jobs went well. If your guys are working too slowly, that is a management issue and not one about incentives.


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## MikeGC (Dec 6, 2008)

I pay an incentive only to the crew lead if they save me labor dollars. 

They also get docked harshly for all callbacks that are the result of their quality control that is very harsh so they dont go there with any inferior work.


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## Warren (Feb 19, 2005)

MikeGC said:


> I pay an incentive only to the crew lead if they save me labor dollars.
> 
> They also get docked harshly for all callbacks that are the result of their quality control that is very harsh so they dont go there with any inferior work.


Is this legal to do with an employee? How do you know if they save you labor dollars? Do you show them your bids and books?


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## BamBamm5144 (Jul 12, 2008)

MikeGC said:


> I pay an incentive only to the crew lead if they save me labor dollars.
> 
> They also get docked harshly for all callbacks that are the result of their quality control that is very harsh so they dont go there with any inferior work.


Unfortunately, illegal.

Correct?


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## Dave Mac (Jan 30, 2006)

you can pay piece work totally legal, but you have to pay their wage if they come in over hours. so if you give them 5 hrs to do a job and they take 8 hrs you have to pay them 8 hrs, what you want to happen is they do that 5 hr job in three hours, and they get paid for 5 hrs. You have to have a good handle on your production rates for this to work, you also cant get greedy and give less hours then what is needed.


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## Warren (Feb 19, 2005)

BamBamm5144 said:


> Unfortunately, illegal.
> 
> Correct?


It is only illegal if the guys are employees. If you call a sub back to fix something, that is different. Since Mike has not replied, one can only assume.:whistling


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## BamBamm5144 (Jul 12, 2008)

Warren said:


> It is only illegal if the guys are employees. If you call a sub back to fix something, that is different. Since Mike has not replied, one can only assume.:whistling


Does the sub does not have to fix the problem?

Or since they are a sub and not employee, they can't be forced to fix the issue?


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## Warren (Feb 19, 2005)

Bam, If I sub out a roof to you, and it leaks, I would call you back to remedy it right? Same thing applies here. If you made an error, like missed a piece of flashing or something, would you not redo that part for free?


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## BamBamm5144 (Jul 12, 2008)

Warren said:


> Bam, If I sub out a roof to you, and it leaks, I would call you back to remedy it right? Same thing applies here. If you made an error, like missed a piece of flashing or something, would you not redo that part for free?


Well yes but what I am saying is that would the sub be legally bound to fix the issue or would the company?

Of course this would end any working relationships but I'm still wondering.


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## Mike's Plumbing (Jul 19, 2010)

Back in the day when I was doing new construction we had job folders with everything we needed. Inside was a sheet that listed hours to complete the job. It also had an independant time sheet separate just for the job to track hours. 

So on a ranch lets say the rough plumbing hours were 45 total and that includes everything. If we went over we would have to explain why. If we went under the hours our bonus at the end of the year was a reflection of that. 

On callbacks, once in a while you have one and that's human. But if it was consistent there would be an office meeting and the plumber would have to explain himself.

It worked great and that's partially because the owner hired honest hardworking people.....we were a team.

If you bid a job you have to meet certain criteria. If all of the plumbers were going over the hours then either the bidding system was bad or the plumbers were planning a conspiracy.:laughing:


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## TheItalian204 (Jun 1, 2011)

As people above mentioned it is not legal.

Though I do throw in some legal perks for my guys. Keep in mind,that my guys usually work by job not my hourly rate.
For instance:

Bonuses for finishing job with quality and faster than it was expected. I just talk to them plain and simple. I tell them that if they finish this one faster than expected and with quality they can move on next one so thats additional money for them.
I tell them that I will also throw in some additional cash bonuses for doing more jobs than was expected a week.

I take my workers for barbeque on saturdays to my cabin,so they can hit up the lake,fishing and etc.

Overall,I think if you are company owner,you should have good rallying skills.
I tell my guys that they should take pride in working for our company and I always show them applications that come in for new positions that people try to get into.

I dont want to say its communism but close. If I drive a nice truck,I create possibility for my worker to get one one day.

I also spend time getting to know their families and ask about their problems.
I think people like to know that you care for them. Try treating your guys like a family and see if it works out for you. I always know how to get my workers pumped up for work so they do it with quality and faster than usual.


Maybe I just own small business and not everyone can follow do same things I do,but getting for some beers with your workers and talking to them like man to man is always good. Dont be "that guy who sits in the office", be the guy who relates to their problems.
I always keep mentioning to them that it is not only for me,but for them also,so they can feed family and get what they want done for the future.I never call it "my company" I call it "our company.

It might look harder than it sounds,its not that hard.


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## Warren (Feb 19, 2005)

If it was a sub who was working by the hour, there way be an exclusion. Of course, a sub should not be doing a whole roof by the hour. I was under the same opinion as you were, that an employee can not be required to fix something on their own time. Mike said that he would require his crew lead to do this. So I was implying that this crew lead must be a sub.


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## Coast 2 Coast (Jun 1, 2011)

try paying by the day whether they do the work they need to do in 4,5,6,7 or 8 hours happy employees and u can better calculate the day for the job and if they start taking to long go back to hourly


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## Warren (Feb 19, 2005)

Coast 2 Coast said:


> try paying by the day whether they do the work they need to do in 4,5,6,7 or 8 hours happy employees and u can better calculate the day for the job and if they start taking to long go back to hourly


So you pay employees by the day? This is getting really good now.


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## PSG (Oct 16, 2010)

When I was working as a commercial super I was given a breakdown of the man-hours for the job. If it went over I would get my you know what chewed on. If it continued I knew I would be fired. That was pretty good incentive for me.


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## BamBamm5144 (Jul 12, 2008)

My head is bouncing off the walls. So confused.

How do you have time to do payroll daily??


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## Warren (Feb 19, 2005)

I think most of the confusion is when people use the word "employee" to mean something that it is not. Use words like worker, sub, guys, etc, but don't call them employees if they aren't. It just causes confusion for those of us that use the word correctly.


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## CompleteW&D (May 28, 2011)

Thanks Warren.... I think the answer is drastically different between sub's and full or part time employees. I believe the OP is referring to (normally hourly) employees not sub contractors.


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## Mike's Plumbing (Jul 19, 2010)

BamBamm5144 said:


> My head is bouncing off the walls. So confused.
> 
> How do you have time to do payroll daily??


I'm sure there's an app for that. :laughing:


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## DarrenB (Aug 30, 2009)

You have to guarantee an employee minimum wage. If you pay by the piece, you have to take the piece rate earned each pay period and divide by hours worked. That is the employees hourly rate for the pay period.
if over 40 hours per week then you have to pay an additional half time.


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## Coast 2 Coast (Jun 1, 2011)

Warren said:


> So you pay employees by the day? This is getting really good now.



yes the guys get 4 hours for all work under 4 hours and if they work more then 4 they get paid 8 weather its 5,6,7 or 8 hours they work. With epoxy flooring sometimes if your paying our full time employees only they hours they work they would quit and find new jobs


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## JBM (Mar 31, 2011)

If you have your men organized to the T and dont expect them to work like dogs, your prices are to low.


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## AFOREMA1 (Jun 25, 2009)

DarrenB said:


> You have to guarantee an employee minimum wage. If you pay by the piece, you have to take the piece rate earned each pay period and divide by hours worked. That is the employees hourly rate for the pay period.
> if over 40 hours per week then you have to pay an additional half time.


If you have hourly employees, then yes they must receive minimum wage or more. If they are salary then there are different rules. And as for overtime I believe there are loop holes for that based on company sizes and income as well.

And just to throw it out there whether you call them subs, employees , Guys, etc if they work exclusively for you or receive most of their income from you then they are employees by law. Not subs. And employees cannot be asked to or willingly work for you for free it is a violation of labor laws.


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## Dirtywhiteboy (Oct 15, 2010)

Back in the day we used to have Huki pau Friday:clap: the boss would let us know what he wanted done for the day and when we were done we got paid for 8:clap:maybe done by 1:00 and go surf.


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## [email protected] (Jan 10, 2010)

TheItalian204 said:


> As people above mentioned it is not legal.
> 
> Though I do throw in some legal perks for my guys. Keep in mind,that my guys usually work by job not my hourly rate.
> For instance:
> ...


 Cash bonuses are illegal. Way more illegal than paying piece rate when meeting minimum wage standards. 
If your paying guys fair piece rates they should never even be close to minimum wage. If they are you are either underpaying or you need to find new employees. 
A sub is always responsible for mistakes where an employee can only be held liable for gross negligence.


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## monumentinc (Dec 6, 2010)

I have been reading these posts without commenting but wanted to comment on this topic. Here is my introduction, we are a general contracting company in Northern California. 

We have been paying our painter by the job for quite some time now and it works great. He is motivated to finish quickly and has become super efficient, he supervises his own helpers who are paid hourly but their pay is deducted from his gross so he is motivated to keep them productive. He is still paid as an employee and pay is based upon square footage of the house just to keep it simple. He ends up making about $25 per hour on average, but has control of his own schedule and we don't have to micro-manage and wonder if he took an extra 1/2 hour break etc. He likes it because as he becomes faster he makes more money, an automatic raise. I don't know why it would be illegal as some professions are paid based upon salary or commissions not by the hour. The key is having someone who takes pride in their work and will not cut corners to finish faster.


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## Tom Struble (Mar 2, 2007)

:blink:


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## Warren (Feb 19, 2005)

monumentinc said:


> I have been reading these posts without commenting but wanted to comment on this topic. Here is my introduction, we are a general contracting company in Northern California.
> 
> We have been paying our painter by the job for quite some time now and it works great. He is motivated to finish quickly and has become super efficient, he supervises his own helpers who are paid hourly but their pay is deducted from his gross so he is motivated to keep them productive. He is still paid as an employee and pay is based upon square footage of the house just to keep it simple. He ends up making about $25 per hour on average, but has control of his own schedule and we don't have to micro-manage and wonder if he took an extra 1/2 hour break etc. He likes it because as he becomes faster he makes more money, an automatic raise. I don't know why it would be illegal as some professions are paid based upon salary or commissions not by the hour. The key is having someone who takes pride in their work and will not cut corners to finish faster.


Just because a method works for you doesn't make it legal. I am not sure exactly how you are paying this guy as an employee, while subtracting other workers pay form his.


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## monumentinc (Dec 6, 2010)

Warren said:


> Just because a method works for you doesn't make it legal. I am not sure exactly how you are paying this guy as an employee, while subtracting other workers pay form his.


Everyone is paid with a paycheck with payroll taxes withheld. For example if the job pays $1000 for and the helpers make $200 figured hourly at $13 per hour then the leader gets a gross check of $800 with taxes withheld. 
I actually used to be an accountant when I worked for someone else and I now use a payroll service to process our checks who are also very legit. Unless we were paying cash or less than minimum wage I don't know what is not legal. I pay myself a flat amount too, not hourly..Anyway, not trying to start a controversy just wanted to say that it works for us.


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## Warren (Feb 19, 2005)

But you would have to take into account all of the misc charges for the employees. Fed tax, state tax, local, WC Unemployment, 401k, misc. How is that accounted for?


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## monumentinc (Dec 6, 2010)

Warren said:


> But you would have to take into account all of the misc charges for the employees. Fed tax, state tax, local, WC Unemployment, 401k, misc. How is that accounted for?


It comes out of the $800, just like if you were paying someone 32hours @ $25 per hour, their gross pay would be $800.They would receive a pay stub showing all the withholding exactly as if you came up with the number by paying hourly. So their actual check would be less than $800 because you would withhold the payroll tax ect.


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## [email protected] (Jan 10, 2010)

monumentinc said:


> I have been reading these posts without commenting but wanted to comment on this topic. Here is my introduction, we are a general contracting company in Northern California.
> 
> We have been paying our painter by the job for quite some time now and it works great. He is motivated to finish quickly and has become super efficient, he supervises his own helpers who are paid hourly but their pay is deducted from his gross so he is motivated to keep them productive. He is still paid as an employee and pay is based upon square footage of the house just to keep it simple. He ends up making about $25 per hour on average, but has control of his own schedule and we don't have to micro-manage and wonder if he took an extra 1/2 hour break etc. He likes it because as he becomes faster he makes more money, an automatic raise. I don't know why it would be illegal as some professions are paid based upon salary or commissions not by the hour. The key is having someone who takes pride in their work and will not cut corners to finish faster.


 So he's an employee that works price rate but his hourly pay comes out to average $25 per hour. So $25 per hour is what you base your work comp coverage off right? 

Or is he a sub but you pay for his labor? That would be illegal and make him an employee anyway.


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## Warren (Feb 19, 2005)

monumentinc said:


> It comes out of the $800, just like if you were paying someone 32hours @ $25 per hour, their gross pay would be $800.They would receive a pay stub showing all the withholding exactly as if you came up with the number by paying hourly. So their actual check would be less than $800 because you would withhold the payroll tax ect.


Wrong.

The employer pays half of the Social Security and Medicare tax and Workers comp. In Ohio we also pay Unemployment Insurance, and I think most if not all states require this of the employer also.

You were an accountant?:whistling


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## [email protected] (Jan 10, 2010)

You answered already. That's exactly how piece work has to work. No going over 40 he's without 1 1/2 though which gets hard.


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## monumentinc (Dec 6, 2010)

Warren said:


> Wrong.
> 
> The employer pays half of the Social Security and Medicare tax and Workers comp. In Ohio we also pay Unemployment Insurance, and I think most if not all states require this of the employer also.
> 
> You were an accountant?:whistling


We do pay our share of the payroll taxes, the only difference is how we came up with the $800. Rather than watching them every minute to make sure they are productive all the time we pay a flat rate that is the same as if they worked 32 hours @$25, the reason for this (which is the point of this whole discussion) is that it has been our experience that employees are less productive when paid for time. They make more $$ when they slack off. 
Anyway back to your question, actually to pay this person (since you want to get technical) it costs us more than $800 as we pay workers comp on top of the $800 and 1/2 of the payroll taxes. 
Not sure why you would assume we were not paying all the taxes. When people are salaried they are paid a fixed amount regardless of the amount of hours actually worked, this is like that. 

Anyway I am sorry that I posted, will just go back to reading, certainly was not my intention to argue.


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## monumentinc (Dec 6, 2010)

[email protected] said:


> So he's an employee that works price rate but his hourly pay comes out to average $25 per hour. So $25 per hour is what you base your work comp coverage off right?
> 
> Or is he a sub but you pay for his labor? That would be illegal and make him an employee anyway.


Yes to the first part. He is not a sub but an employee. And we do base his work comp off the $25, most of the time I think he averages more than that anyway. 
And yes, he would have to be licensed and work for others besides us to be a subcontractor.


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## Warren (Feb 19, 2005)

I am not arguing, nor did I accuse you of not paying taxes. I am just saying that the way you have it set up, that guy is getting cheaper employees than if he paid them himself. If you are paying all the other crap, he is getting at least a 15% discount on the workers you provide him.


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## monumentinc (Dec 6, 2010)

Warren said:


> I am not arguing, nor did I accuse you of not paying taxes. I am just saying that the way you have it set up, that guy is getting cheaper employees than if he paid them himself. If you are paying all the other crap, he is getting at least a 15% discount on the workers you provide him.


He doesn't pay them, they are his co-workers, his helpers are also my employees, he just has an incentive to make sure that they are productive as his pay is tied to their productivity. I guess you are saying that I am paying their taxes too, which is correct but I would be anyway. 
I think if we strictly paid hourly it would be a similar amount to this anyway, it is just a way of having predictable costs and days to finish jobs. The productive workers like it.


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