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I suppose I could look into it but I feel that if the new car stores are doing it this way, it should be fine. My tech is happy with this arrangement and It's kind of a moot point as he only works 40 hours a week anyway. There may come a time when I'll have to look more closely but this is working for now.
We use Paychecks for our payroll service. Anytime we have any questions about what the state laws are for payroll we call them and they will tell us what the law is.
I can't say I'm super versed in the law but I can say that most shops(including new car stores) are paying flat rate around here still, and they are not paying time and a half.
I pay flat rate with a punch time guarantee. Where I'm at, hourly employees get paid time and a half over 40 hours but flat rate employees can be paid just hourly rate times hours booked. This way the employee gets paid hourly with a "spiff" for booking over 40 and I don't have to pay time and a half.