Paying Flag Rate

[integritytrans]

Hello All,

 

I am going to hire on a new technician in a few weeks here and it will be the first time I am considering paying them flag hours. I have adp payroll processing so they take care of all the taxes and things of that sort for all the employees that are hourly.

With flag rate hours, how are the taxes taken out for this particular type of wages for the technicians weekly check? I would appreciate all the insight I can get that way when the time comes I am very prepared.

 

Thanks again for your help

 

Henry

[Marksas]

I give my techs a base hourly rate and they all punch a clock. When I run payroll I input the hours and the OT hours. Once I have the total I have another pay category called profit sharing that I use to make up the difference between their "commission" and the hourly rate. This way we can track hours for Workers Comp as well as for labor laws. Another benefit is that you don't have someone saying they are not getting paid if they don't have a car in their stall.

My mechanic shop is hourly with profit sharing based upon over all team efficiency. That's what works best for us. My body shop is uses the profit sharing model described above. It's also a totally different animal. We also pay biweekly. I never wanted to be hampered with having to do payroll every week as I like to have vacations also.  Techs get used to it and I have provided advances when hiring someone that is coming from a weekly pay shop because it could be almost 3 weeks before they receive a check depending on when they start. I have had techs not come because they can't work on a every other week paycheck and I am not willing to change it at this time. Not saying I wont ever change it. 

[AndersonAuto]

5 hours ago, integritytrans said:

Hello All,

 

I am going to hire on a new technician in a few weeks here and it will be the first time I am considering paying them flag hours. I have adp payroll processing so they take care of all the taxes and things of that sort for all the employees that are hourly.

With flag rate hours, how are the taxes taken out for this particular type of wages for the technicians weekly check? I would appreciate all the insight I can get that way when the time comes I am very prepared.

 

Thanks again for your help

 

Henry

It's very simple. Just give the payroll company the number of hours the tech is to be paid for, and make sure they understand the tech doesn't get overtime. That's just about it.

If you pay flat rate only with no guarantee like I do, then the tech isn't eligible for overtime. It makes life easy both for payroll and legally.

[rpllib]

I might caution that not all labor law attorneys agree that flat rate technicians working in a non dealer environment are exempt from overtime. It appears there may be some variance among  jurisdictions. It appears that most labor law attorneys agree that flat rate is an exempt form of pay in a dealership or other entity where new vehicles or equipment is sold as the primary business.

[A1Harry]

Don't do it. They become wolf. Pay them hourly and gradually raise their salary when they improve their skills.

[Marksas]

I think if you review some of the lawsuits pending in CA regarding Flat rate techs you start to think a little differently. That crap out there tends to make it's way East. That's why I have always set an hourly rate and have everyone punch a clock to track overtime. Even my manager punches a clock.  I also get a weekly newsletter update on various labor lawsuits and it's pretty interesting to see some of the suits and fines that companies are paying. It's actually a little scary and keeps us on our toes about employee documentation. 

[integritytrans]

Thank you all for your response. I sided with paying them a fair hourly rate based upon all of your feedback.

Thank you again

Sent from my SM-N920P using Tapatalk

[mmotley]

Mark, would you mind sharing some details on your profit sharing pay scale? 

[integritytrans]

Yes that would interest me as well Mark.

 

Thank you!

[carbtech72]

I only have one employee and I pay him flat rate/flag hours. He's good and doesn't have any problem making hours. Works out for both of us.

[A1harix]

It's always good until he sue you. In CA, many company (dealers and independent) got sued already, including myself. I loss $150k. I hope it will never happen to anyone. We did nothing wrong, but if employee knows the law, he can sue you anytime, even if he still works for you.

[AndersonAuto]

15 hours ago, A1harix said:

It's always good until he sue you. In CA, many company (dealers and independent) got sued already, including myself. I loss $150k. I hope it will never happen to anyone. We did nothing wrong, but if employee knows the law, he can sue you anytime, even if he still works for you.

I'm interested in knowing if he sued you under CA law, or if it was under a DOL rule. Which law exactly? I'd like to read it.

[tyrguy]

I pay my guys an hourly rate + overtime on a 44 hour week OR a flat rate whichever is higher. 

[A1harix]

On 4/7/2017 at 5:22 AM, AndersonAuto said:

I'm interested in knowing if he sued you under CA law, or if it was under a DOL rule. Which law exactly? I'd like to read it.

http://www.dir.ca.gov/pieceratebackpayelection/AB_1513_FAQs.htm

[AndersonAuto]

10 hours ago, A1harix said:

http://www.dir.ca.gov/pieceratebackpayelection/AB_1513_FAQs.htm

Thanks. I scanned through it, and it looks like a pain to deal with. I'll have to read it more thoroughly later. If I get the jist of it, it looks like CA has mandated "rest and recovery" breaks, and now mandates how much you must pay for the mandated breaks. Looks like you'd have to recalculate break period wages every week.

[A1harix]

I was paid flag rate at dealer that I worked for 20 yrs ago, and I think its the most fair way to pay wages, so I did that when I opened the shop. I didn't know this law has changed and made me in trouble. Again I lost 150k for something stupid. I don't do any crime or any bad thing. Just hired and fired one fking wrong employee who knows law more than you. 

[xrac]

9 hours ago, A1harix said:

I was paid flag rate at dealer that I worked for 20 yrs ago, and I think its the most fair way to pay wages, so I did that when I opened the shop. I didn't know this law has changed and made me in trouble. Again I lost 150k for something stupid. I don't do any crime or any bad thing. Just hired and fired one fking wrong employee who knows law more than you. 

I feel sorry for anyone doing business in Califirnia (west coast) or New York State (left coast). These are the two highest regulated states.