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Are you paying your employees what they deserve?

Joe Marconi
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  • Joe Marconi changed the title to Are you paying your employees what they deserve?
bantar Community Regular

bantar

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I just hired a new C tech at $15.   He finished tech school and is overall a good C Tech and limited tools.    My old B ($22) and C ($18) techs both left to take a job paying $1300/week with 50 hours required.  Given this, it would seem we have a local market range for C Techs of $15-$24/hr.  

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bantar Community Regular

bantar

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Now that we are doing my new C Tech's first payroll, my manager just reminded me that he is $15/hr + $5/flag hour.   This is better as we did want to maintain a competitive rate to reduce turnover.  My previous pay plan was Wall Time or Flag Time whichever is higher.   My new pay plan is now Hourly + a Flag kicker.

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Andre R Enthusiast

Andre R

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We have 3 techs all on hourly. One  at $22.00 one  at $28.00 and one at $35.00. The performance 

bonus starts at 35 flagged hours $2.00 at 35 thru 39 hours bumps to $4.00 at 40 hours $6.00 at 45 hours and $8 at 50 hours.

 

 

 

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CTC Rookie

CTC

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Be careful with bonuses….had my hand slapped by federal labor board! She said we should never have a bonus plan that says if you do this you get this. Only applies to bonus, not flat rate, they consider that piece meal pay, which is entirely different. Take or leave the advice, will just tell you that it cost me a lot of money!  My suggestion is to ask your local labor board, if you have questions prior to them checking in on you.

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bantar Community Regular

bantar

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5 hours ago, CTC said:

Be careful with bonuses….had my hand slapped by federal labor board! She said we should never have a bonus plan that says if you do this you get this. Only applies to bonus, not flat rate, they consider that piece meal pay, which is entirely different. Take or leave the advice, will just tell you that it cost me a lot of money!  My suggestion is to ask your local labor board, if you have questions prior to them checking in on you.

I'm interested in understanding this more.  There must be some mitigating factors that make this stand out and it may very well impact us directly, but as written, I don't understand it.   There's a real caution in your note.  Can you elaborate more on the specifics of the law or rule being violated?  It'll be easier to probe our local labor boards with a known concern.

I've been on many bonus plans that were based on numerous "if you do this, you get this" criteria and some "if WE do this, you get this" too.  Examples: 

  1. No Individual Contribution:  If business exceeds $X revenue or $Y in GP, then you will get a bonus. 
  2. Individual Contribution:  If business exceeds $X revenue or $Y in GP, then you will get a bonus, but it will be factored by your Review Rating (Bonus * Ind Factor)  It can be greater than or less than the full amount.   5 = 125%, 4 = 100%, 3 = 75%, 2 = 50%, 1 = 0%.  
  3. If you complete Project X in 6 months, you get 2 times $Y, in 8 months, you get $Y and if >8 months, you get $0.   This bonus only applies to Project X.  If you are working on Project Y or Z, there is no bonus plan.
  4. If you complete Project X with < 50 mistakes, you get $Y, < 25 mistakes, $Z, and <10 mistakes, 2 times $Z.
  5. Multifactor Bonuses:   On Time > 95% of the time = 25% of your bonus, Have a good attitude 25%, Team completes Project G in 3Q 25%, You also complete Project X by Jan 3, 25%, with a chance to earn 2x 25% if completed by Nov 30.
  6. All Bonuses are Cancelled (except) Plan:   Director level and above will get paid 50% of your normal bonus, but all lower levels are being paid at $0 because we missed our revenue targets.   Yep, I was on this plan too.

Bonuses are often designed to encourage a desired behavior or outcome.  Often the right behaviors lead to the best outcomes, so they are related. 

In this business, we are saying that we will pay you a percentage of sales for every hour of sales that you personally work on.   Frankly, the criteria is only that you performed the work.  Our desired behavior is to encourage productivity and also to reward you for your contribution to the business.    If you are a 2x producer, you get 2x the reward.

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Hands On Collaborator

Hands On

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In my area Mc Donalds and Walmart pay $15/ hour. We start at $900 a week base for entry level, and go up from there. Bonus kicks in after 30 hours produced each week for a month straight. We bill $132/hr. I think this thread needs all of us to include our labor rate also, pay is different depending on your market area.

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derektinder Rookie

derektinder

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In high cost SF Bay Area I am now $180/hour labor rate from $155 for a few years and the dealers are all at least $200/hour. My senior tech makes $40 an hour flat rate and he is worth it. My B tech is $30 and my two C techs are $24 and $22. I also keep my reputation high so people are choosing to come to my shop. 

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Grace Automotive Rookie

Grace Automotive

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We pay flat rate, and hourly rate for time not spent on an actual job.

So, on a busy day where a tech spends his entire 8 hours working on billable jobs, he doesn't get any hourly pay, he gets his flat rate.

However, on a slow day where he may only spend 4 hours on billable jobs, he gets his flat rate for those 4 hours, and his hourly pay for the remaining 4 hours. 

An example is a tech that gets $25/Hour Flat rate + $13/Hour hourly.

During an 8 hour day, if he works 5 hours on billable stuff, but the actually hours billed to the customer were 8 hours, he gets paid 8 hours @ $25/hour and the remaining 3 hours of the day where he wasn't working on a billable job he gets paid 3 hours @ $13/Hour. 

This accomplishes several things:

1.) It gives him piece of mind that even if things get really slow, he's going to get paid for the time he's at the shop. 

2.) It takes away the temptation to say: "I don't get paid for that" when asked to do a menial job like cleaning up or helping another less experienced tech with a diagnosis. (I've seen a lot of this at some shops. Where flat rate techs don't want to do an oil change or check tire pressures because it doesn't pay)

3.) It still incentivizes him to be more efficient when he is working a billable job. 

Of course our Shop Management system can track when a tech is working on a job and when he's just "on the clock". If your shop management system doesn't give you an easy way to track this stuff I can imagine it would be a nightmare.

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CTC Rookie

CTC

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I understand everyone has a different pay plan, I also understand bonuses, I am saying that federal labor laws are easily violated by pay plans. Flat rate is cut & dry & shouldn’t be a problem, however I was specifically told that bonus plans are a problem & I paid heavily for having one. The easiest way to explain it is to say that if you are paying flat rate, don’t deviate without speaking with someone with the federal labor board. They will answer your questions if you ask.  If you pay hourly, or any thing close, you better make sure your people punch a clock & you better pay them for every hour they punch including time & a half over 40. Bonuses change the overtime rate you owe, that’s why if you have a specific plan, you have to account for it while factoring overtime.

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CTC Rookie

CTC

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On a side note….don’t trust the attorneys, just ask the labor board. Seems scary enough to call but they will steer you in the right direction whereas a labor attorney will offer advise, but will balk when fines are issued & leave you holding the bag!

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Hands On Collaborator

Hands On

Posted
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10 hours ago, CTC said:

I understand everyone has a different pay plan, I also understand bonuses, I am saying that federal labor laws are easily violated by pay plans. Flat rate is cut & dry & shouldn’t be a problem, however I was specifically told that bonus plans are a problem & I paid heavily for having one. The easiest way to explain it is to say that if you are paying flat rate, don’t deviate without speaking with someone with the federal labor board. They will answer your questions if you ask.  If you pay hourly, or any thing close, you better make sure your people punch a clock & you better pay them for every hour they punch including time & a half over 40. Bonuses change the overtime rate you owe, that’s why if you have a specific plan, you have to account for it while factoring overtime.

I agree. My accounting system has a few options for how they are entered in the system, hourly, salary, or commission. All of my guys are entered in as commission, and their base pay is well above minimum wage to ensure I never come close to violating minimum wage laws even if they drag feet all month and take base.

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bantar Community Regular

bantar

Posted
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15 hours ago, CTC said:

I understand everyone has a different pay plan, I also understand bonuses, I am saying that federal labor laws are easily violated by pay plans. Flat rate is cut & dry & shouldn’t be a problem, however I was specifically told that bonus plans are a problem & I paid heavily for having one. The easiest way to explain it is to say that if you are paying flat rate, don’t deviate without speaking with someone with the federal labor board. They will answer your questions if you ask.  If you pay hourly, or any thing close, you better make sure your people punch a clock & you better pay them for every hour they punch including time & a half over 40. Bonuses change the overtime rate you owe, that’s why if you have a specific plan, you have to account for it while factoring overtime.

Great feedback.  Thank you!!!     I called the Dallas Office of the Dept of Labor Wage and Hour Division to check on my compliance.   Very friendly and knowledgeable.  Didn't even ask who I was.  I encourage you to call.  However, what she said was super-complicated if it's the first time that you've heard it.  It still hurt my head on today's call.   I think I can explain it, but it belongs in a separate thread.  I will post that shortly.

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Grace Automotive Rookie

Grace Automotive

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18 hours ago, CTC said:

Paying flat rate & hourly you must punch clock & pay overtime, otherwise you are setting your self up for fines & backpay. Just a word to the wise, be careful!

Agreed.

We do have punch clock for in and out for the day and for lunch, as well as job clock to track how long working on actual flat rate job.

Our system pays a tech more than if they were simply getting hourly plus overtime. 

For example if a tech only works on one job a particular day. He's on the time clock for 8 hours. 

If he is on the job clock for that one job for 5 hours, then he only gets paid for 3 hours at his regular hourly pay.

However, the incentive is if that job calls for 7 hours, he gets 7 hours at his flat rate pay in addition to his 3 hours of hourly pay....and the flat rate pay is always higher than the hourly pay.

On the flip side of that, if that job only pays 2 hours, and he still spent 5 hours on the job clock then he only gets 2 hours at flat rate and 3 hours at regular hourly pay. 

That's an extreme example though. I don't have any techs that take 5 hours to do a job that calls for 2 hours (unless the labor manual is wrong, in which case I make adjustments...never want to rip of my techs or my customers)

With that said...

We are only open 8-5 Monday-Friday and everyone must take a 1 hour lunch break. So, there is no possibility of anyone running into an over-time situation at our shop whether we paid flat rate or not. 
 

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  • Have you checked out Joe's Latest Blog?

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