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Does anyone here pay an employee salary pay?
Salary Employee
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Almost never
It has been proven at my shop hundreds of times when you pay an hourly rate or salary you get 1/2 as much work. I tried every pay system hundreds of times for 40 years.
We paid our employees a flat percentage of the job for 99% of our 40 years. Example: We install drain pipes in a home for $*** and we paid the installed 20% of the entire contract amount. For many years the employees finished these jobs in one day.
Then, we thought we could save some money and we started paying the installers a flat $160 per day. All of a sudden no employee could finish a job in less than two days. So, we switched back to a percent and the employees started doing 1-1/2 jobs every day. They could finish a job by 1 p.m. and start another job.
A few months ago, I took an employee who has been with me for 18 years and I gave him a guaranteed salary of $1500 per week. I figure this guy is well-worth $75k per year. There are many reasons I decided that he would be the only employee I every gave a salary to and too many reasons to get into. Now that I am paying him a guaranteed salary everything looks much different and while the employee is much more at ease and knows he will get a fat paycheck every week regardless of whether he works or not I am always concerned about the number of hours he works, his effort, productivity, and I have to have an accounting system that tells me whether or not he is in the red.
A better way to pay a salary is to pay a daily rate. I think this is fair for the employer and employee because the accountability is not stretched over a long period of time. You use the employee's services on a per-day basis and you make sure you have a good workload for each day he works. When you don't need him you don't have to pay him. You don't have to worry about the lost time such as lunches and travel. For my employees they have an expected amount of work to complete they work overtime with no extra pay when they do not complete a reasonable amount of work. There are very rare exceptions where I pay overtime.
Virtually never pay an employee by the hour nor a salary unless you absolutely have to.
It has been proven at my shop hundreds of times when you pay an hourly rate or salary you get 1/2 as much work. I tried every pay system hundreds of times for 40 years.
We paid our employees a flat percentage of the job for 99% of our 40 years. Example: We install drain pipes in a home for $*** and we paid the installed 20% of the entire contract amount. For many years the employees finished these jobs in one day.
Then, we thought we could save some money and we started paying the installers a flat $160 per day. All of a sudden no employee could finish a job in less than two days. So, we switched back to a percent and the employees started doing 1-1/2 jobs every day. They could finish a job by 1 p.m. and start another job.
A few months ago, I took an employee who has been with me for 18 years and I gave him a guaranteed salary of $1500 per week. I figure this guy is well-worth $75k per year. There are many reasons I decided that he would be the only employee I every gave a salary to and too many reasons to get into. Now that I am paying him a guaranteed salary everything looks much different and while the employee is much more at ease and knows he will get a fat paycheck every week regardless of whether he works or not I am always concerned about the number of hours he works, his effort, productivity, and I have to have an accounting system that tells me whether or not he is in the red.
A better way to pay a salary is to pay a daily rate. I think this is fair for the employer and employee because the accountability is not stretched over a long period of time. You use the employee's services on a per-day basis and you make sure you have a good workload for each day he works. When you don't need him you don't have to pay him. You don't have to worry about the lost time such as lunches and travel. For my employees they have an expected amount of work to complete they work overtime with no extra pay when they do not complete a reasonable amount of work. There are very rare exceptions where I pay overtime.
Hopefully one of those rare exceptions is when they work more than 40 hrs in a week, 'cause that's the law.
Oh, so that's how you justify not paying OT?
Piecework is also how subs are able to use illegals, not provide workmen's comp, pay payroll taxes, etc etc.
You get by with it on a technicality, but if it got challenged you would lose in court.
The fact that it is a technicality is why you wont lose in court.
Now there are those who cross a techincal line and lose but taking advantage of "technicalities" is as American as as hiring a good tax man
Oh wait that is a tautology.
Piecework is the safest way.
For new construction I pay only by the piece and I think that is the only way to guarantee that nobody loses. I have never had a problem piecing down to the tiniest detail because there is an over-supply of hotshots who would rather have piecework because they know they can earn twice the hourly rate that is offered.
It is funny because you know the workers who want to be guaranteed an hourly wage will run you broke. You know right away what a person is worth when they would rather piece the job.
The difference between piecing and subcontracting is the employee can walk any time if he feels the price per piece is too low. Also, with piecing I have the opportunity to tell the employee to stop if he is making too much money and get someone else for a lower price. I never did, but would if I had to.
For new construction I pay only by the piece and I think that is the only way to guarantee that nobody loses. I have never had a problem piecing down to the tiniest detail because there is an over-supply of hotshots who would rather have piecework because they know they can earn twice the hourly rate that is offered.
It is funny because you know the workers who want to be guaranteed an hourly wage will run you broke. You know right away what a person is worth when they would rather piece the job.
The difference between piecing and subcontracting is the employee can walk any time if he feels the price per piece is too low. Also, with piecing I have the opportunity to tell the employee to stop if he is making too much money and get someone else for a lower price. I never did, but would if I had to.
You may want to read this.
http://www.lang-baker.com/publications/constructionadvisor/piece-work.htm
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Not everybody who gets paid by the hour takes advantage of the employer. I've worked with truly great people when I ran jobs for other companies and they worked extremely hard, were motivated, dedicated and strived to get jobs under the bid hours.
But those companies had a culture worthy of respect. They treated employees well and respectfully..... and the employees returned the favor.
Scumbag employers have employees who have no vested interest in protecting the company.
But those companies had a culture worthy of respect. They treated employees well and respectfully..... and the employees returned the favor.
Scumbag employers have employees who have no vested interest in protecting the company.
Maybe I'm misunderstanding what you're saying, but if I worked for you, and I normally worked 40 hours per week, for $20/hour ($800), and then one week I worked 60 hours are you saying you would drop my pay to $11.42/hour so that my total was the same $800?
That's illegal and it's a bunch of BS.
It's one thing if a guy is a true salaried employee and expects to work a little OT once in a while for free, but in return, if he misses a day once in a while he gets paid anyway.
If you pay hourly or piece-work and you do that to your employees, they should all have a meeting with you. And you should feel lucky if you WALK out of the meeting.
But of course, maybe I misunderstood....I hope so. :thumbsup:
Answer
When you pay employees by the piece it is a win-win for everyone. When I pay my employees an hourly rate I will pay an average of $20 per hour and a maximum of $25 per hour. When my employees work for a percent of the job they average $40+ per hour. My employee's average paycheck is $1500 per week and many times they earn more that $2,000 per week.
There is no way I would guarantee every employee $1500+ per week and with the down time added to the additional costs the same work would be about $2200 per week per employee because I would need 30% more employees.
My average employee earns no less than $75,000 per year. Even my secretary gets about $60,000 with benefits. Incidentally, I have only one part-time secretary in my office and no other secretary, no manager, no parts person, etc. That is where I am frugal, organized, and save the money.
You talk about respect. Give me a guaranteed salary of $1500 per week while I take my 1-hour lunch, two 30-minute breaks, chat at the supply house, take my sweet time on the job, give you a whopping 5 hours of productive work, and I will kiss your buns and make believe I respect you all day long.
One very important thing you need to know is it is the clock watchers who will give you the most trouble. When you pay for every minute an employee works they will make sure they don't give you one minute extra. This costs you 20% more money because there is no motivation to finish a job on the same days when they could very easily. For example, the employees could finish installing a sewer in just 30 more minutes, but because they are on the clock they don't and that 30 minutes turns into another 1/2 day with travel and it stops you from starting a job where YOU could be making more money rather than paying more money.
Piece and percent is the only way to pay when you want a win-win payroll system. One major problem I am positive about is most businesses don't like percent and piecework because of the paperwork.
It is not a matter of taking advantage of the employer. It is all about motivation and what you are suggesting is that we live in an ideal world where the majority of employees are top producers.
When you pay employees by the piece it is a win-win for everyone. When I pay my employees an hourly rate I will pay an average of $20 per hour and a maximum of $25 per hour. When my employees work for a percent of the job they average $40+ per hour. My employee's average paycheck is $1500 per week and many times they earn more that $2,000 per week.
There is no way I would guarantee every employee $1500+ per week and with the down time added to the additional costs the same work would be about $2200 per week per employee because I would need 30% more employees.
My average employee earns no less than $75,000 per year. Even my secretary gets about $60,000 with benefits. Incidentally, I have only one part-time secretary in my office and no other secretary, no manager, no parts person, etc. That is where I am frugal, organized, and save the money.
You talk about respect. Give me a guaranteed salary of $1500 per week while I take my 1-hour lunch, two 30-minute breaks, chat at the supply house, take my sweet time on the job, give you a whopping 5 hours of productive work, and I will kiss your buns and make believe I respect you all day long.
One very important thing you need to know is it is the clock watchers who will give you the most trouble. When you pay for every minute an employee works they will make sure they don't give you one minute extra. This costs you 20% more money because there is no motivation to finish a job on the same days when they could very easily. For example, the employees could finish installing a sewer in just 30 more minutes, but because they are on the clock they don't and that 30 minutes turns into another 1/2 day with travel and it stops you from starting a job where YOU could be making more money rather than paying more money.
Piece and percent is the only way to pay when you want a win-win payroll system. One major problem I am positive about is most businesses don't like percent and piecework because of the paperwork.
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Some of you know two years ago I had two crews running 11 guys. That got to be way too much of a headache so I let some guys go and ran one crew. As guys quit or found new jobs, I never bothered much to look for replacements because it's too time consuming.
The beginning of this year I started with four and am now down to two, both whom have been with me over three years now. Yesterday one approached me about a life change they are contemplating on making. This guy loves the woods and has a job offer up north. I told him he should jump on it and I'll have a job waiting if it doesn't work out.
That leaves my main one guy who has been running crews for me for two years. I am thinking of paying him a salary a year to oversee the day to day stuff in regard to subcontractors, picking up materials, doing repairs, etc.
Our average work week seems to be right around 36 hours and his average gross pay is right around 800. Some weeks more some less so I was thinking of offering him a salary at this rate per week. One issue with hourly is that one man can't do most of the jobs we do by themselves.
I'm not sure what way I want to take this but he has always been hardworking, honest and loyal so I want to keep him around.
The beginning of this year I started with four and am now down to two, both whom have been with me over three years now. Yesterday one approached me about a life change they are contemplating on making. This guy loves the woods and has a job offer up north. I told him he should jump on it and I'll have a job waiting if it doesn't work out.
That leaves my main one guy who has been running crews for me for two years. I am thinking of paying him a salary a year to oversee the day to day stuff in regard to subcontractors, picking up materials, doing repairs, etc.
Our average work week seems to be right around 36 hours and his average gross pay is right around 800. Some weeks more some less so I was thinking of offering him a salary at this rate per week. One issue with hourly is that one man can't do most of the jobs we do by themselves.
I'm not sure what way I want to take this but he has always been hardworking, honest and loyal so I want to keep him around.
Good employees know what they are worth.
When paying by the piece or percent nobody counts the hours and if it takes an employee take 60 hours to do what other employees are doing in 40 hours or less then that is that employee's problem and he will earn what he is worth.
It should seem obvious that if the majority of the employees are okay with a set per-piece price then we are paying fairly.
As far as getting beat up at a company meeting we live in a free country and any employee who thinks the system is unfair can walk.
As for your dropping to $11.42 per hour you also have the opportunity to earn up to $80 per hour. My company has many jobs every week where my employees earn more than $100 per hour. For example, I pay my employees 20% of the sale amount for installing a water heater. We sell the water heaters on the phone for $1250 to $1500. Call me any time, don't tell me who you are and you can confirm this.
From the time we sell the water heater it takes less than 2 hours to have installed. One employee can earn $250 in less than 2 hours, or $125 per hour. Now, what is dishonest about that and would you rather have $25, or $50 for the two hours.
We install floor furnaces all day long for $3800. My employees get 15%. That is $570 just for the labor and the furnace takes 4 hours to install from the time the employee leaves the shop until completion. The helper gets $100 and the installer makes $470 in 4 hours and can do two of these every day and make $940 per day.
We charge $6,000 to install new drain pipes in a home. The employees get 15% for the installation and that is $900. It takes one helper and a plumber about 6 hours max for the average job and the helper gets $120 and the installed earns $130 per hour.
Like I said in a previous post if I paid by the hour these jobs would take twice the number of employees and three times the number of hours. For an overall hourly wage we have to consider that my employees don't have two furnaces to install every day, we don't sell water heaters every day, and there are days we have no work for some employees. Obviously, they can't earn $130 per hour 40 hours per week and there average weekly pay is $1500, but for the hours they actually work they average about $50 per hour, or more.
Now, while people may talk crap about the way I run my shop I would not even consider working for a shop where the boss locks me in at a stinking $25 to $35 per hour which is the going rate for plumbers. That rate is for the losers and there are more losers than people who are really good at what they do.
Earning $20 per hour in Los Angeles does not qualify to rent the most ghetto run-down apartment in Los Angeles. The average lowest rent for a 2-bedroom ghetto apartment is about $1200 per month and the average qualifier is 3 times a person's gross monthly income.
A decent 2-bedroom apartment in a middle class area is $1800 per month and to qualify I need a $5400 per month gross. I need to earn $45 per hour (not $20 per hour).
When you work by the piece or percent nobody counts the hours and that is the greatest part. If an employee can get 40 hours of work done in 20 hours he can go home at noon every day and make $80 per hour. This is very possible at my shop and it happens.
When paying by the piece or percent nobody counts the hours and if it takes an employee take 60 hours to do what other employees are doing in 40 hours or less then that is that employee's problem and he will earn what he is worth.
It should seem obvious that if the majority of the employees are okay with a set per-piece price then we are paying fairly.
As far as getting beat up at a company meeting we live in a free country and any employee who thinks the system is unfair can walk.
As for your dropping to $11.42 per hour you also have the opportunity to earn up to $80 per hour. My company has many jobs every week where my employees earn more than $100 per hour. For example, I pay my employees 20% of the sale amount for installing a water heater. We sell the water heaters on the phone for $1250 to $1500. Call me any time, don't tell me who you are and you can confirm this.
From the time we sell the water heater it takes less than 2 hours to have installed. One employee can earn $250 in less than 2 hours, or $125 per hour. Now, what is dishonest about that and would you rather have $25, or $50 for the two hours.
We install floor furnaces all day long for $3800. My employees get 15%. That is $570 just for the labor and the furnace takes 4 hours to install from the time the employee leaves the shop until completion. The helper gets $100 and the installer makes $470 in 4 hours and can do two of these every day and make $940 per day.
We charge $6,000 to install new drain pipes in a home. The employees get 15% for the installation and that is $900. It takes one helper and a plumber about 6 hours max for the average job and the helper gets $120 and the installed earns $130 per hour.
Like I said in a previous post if I paid by the hour these jobs would take twice the number of employees and three times the number of hours. For an overall hourly wage we have to consider that my employees don't have two furnaces to install every day, we don't sell water heaters every day, and there are days we have no work for some employees. Obviously, they can't earn $130 per hour 40 hours per week and there average weekly pay is $1500, but for the hours they actually work they average about $50 per hour, or more.
Now, while people may talk crap about the way I run my shop I would not even consider working for a shop where the boss locks me in at a stinking $25 to $35 per hour which is the going rate for plumbers. That rate is for the losers and there are more losers than people who are really good at what they do.
Earning $20 per hour in Los Angeles does not qualify to rent the most ghetto run-down apartment in Los Angeles. The average lowest rent for a 2-bedroom ghetto apartment is about $1200 per month and the average qualifier is 3 times a person's gross monthly income.
A decent 2-bedroom apartment in a middle class area is $1800 per month and to qualify I need a $5400 per month gross. I need to earn $45 per hour (not $20 per hour).
Does not apply to my company
Anyone paying less than minimum wage for any reason should have his license revoked and if I had a worker who earned less than minimum wage while other employees were earning $35/hr plus I would pay the minimum wage and immediately terminate the employee.
This article is saying that some contractors are not are purposely trying to piece jobs to pay less than minimum wage and employers should take an employee's pay and divide the number of hours he worked to make sure he is earning at least minimum wage.
Anyone paying less than minimum wage for any reason should have his license revoked and if I had a worker who earned less than minimum wage while other employees were earning $35/hr plus I would pay the minimum wage and immediately terminate the employee.
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