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An Uncomfortable Question, But I Have to Ask it.....Techs are Paid, "Off the Books?"

Joe Marconi

By Joe Marconi
in Human Resources, Employees

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  • Joe Marconi changed the title to An Uncomfortable Question, But I Have to Ask it.....Techs are Paid, "Off the Books?"
weighit Enthusiast

weighit

Posted
Posted

All that can so is come back and bite you hard. If that guy was to ever need to collect workmans comp for an injury, guess who he tosses under the bus trying to get his full money.  I gave cash bonus money for Christmas but all paychecks and hours worked was by the book, and checks. issued.

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Transmission Repair Experienced

Transmission Repair

Posted
Posted
3 hours ago, Joe Marconi said:

Great point about workers comp. No one enjoys paying taxes, but as you point out the risks are too great, and as I mentioned earlier, how does this help raise the bar for our profession? 

Also, don't forget about Social Security.  People who get paid "under the table" are unknowingly clipping themselves out of a lot of S.S. pay later in life.  Earlier in my career, I worked for a family who would pay us by check but insisted we cash the paychecks with them.  They had a safe in their back office full of cash.

They also had a construction company in Chicago that I now suspect took in a lot of cash, but who knows?  Now that I'm collecting S.S., I've come to realize they weren't reporting my income on the 941.  Thanks to those clowns, I'm now collecting much less S.S. than I should be because they weren't reporting my income.

I came to learn that not reporting all income comes back to haunt a person much later in their life.

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Transmission Repair Experienced

Transmission Repair

Posted
Posted
19 hours ago, SW Car Care said:

Absolutely not.  I've had guys sheepishly ask in the past, but they are given the standard response, "If I'm paying my taxes, YOU are going to pay yours!"

That's one of the big reasons why the Democrats wanted to hire 87,000 new IRS agents!  Not reporting income goes on in this country a lot more than we know.  It's rampant.

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Transmission Repair Experienced

Transmission Repair

Posted
Posted
On 9/20/2023 at 12:30 PM, nptrb said:

1099 is a tricky slope to manage in the auto industry. I agree with you that it's not a great way to go. 

Natalie, early in my career I worked at an auto parts store.  I would hang out with an older guy, Tom Sitka, of Sitka Transmissions to just watch and learn about transmissions.  I wasn't concerned about learning anything other than the technical end of the business.  As it turned out, he had some unpaid 941 taxes and the IRS got involved.  The unpaid 941 taxes were a mere drop in the bucket when compared to all the 1099s he had the majority of his employees on.  In the end, the IRS said he had "misclassified" the majority of his employees.  Long story made short, the IRS padlocked his building and later confiscated all the tools and equipment in the building.  From that point on, he was doing transmissions by himself at his house.  I would help him just to learn but that didn't last as I found a job in a transmission shop.

  • Like 1
weighit Enthusiast

weighit

Posted
Posted

One of my guys when I owned a body shop did side work for cash doing roofing for a friend of his. I get a call on a Saturday from him in the hospital, he fell off the roof. Wanted to have me tell the workmans comp and insurance that he was working for me in the shop and tripped and fell. He broke bones in his neck, and was going to be out of work for a while. Are you kidding? No way, working for cash has drawbacks and this is just one of them. Some folks can get away with under the table, but when it crashes, it can hurt in more ways than one. 

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pfseeley442 Explorer

pfseeley442

Posted
Posted

Did it once years ago, worst thing ever, if you can't hide the money you end up claiming the money as income. Lose, Lose,  The most I have ever done resently is given an employee cash for doing some week end work for me. 

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Hands On Community Regular

Hands On

Posted
Posted (edited)

I never felt it was worth it. I did not want to lose all I have built over some tax cheating. There was a fellow one town over from me that started at the exact same time I did. The last I heard he was shut down and kicked out and owed the IRS over 60k in 941 taxes. I am still going strong.

Edited by Hands On
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Transmission Repair Experienced

Transmission Repair

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Posted
On 9/20/2023 at 12:14 PM, nptrb said:

Well, you don't get quality techs who want to get paid "off the books".

Also, you'll never see a long-term employee being paid off the books.  Paying off the books almost automatically induces high staff turnover.  Needless to say, in retirement, a tech's social security payments will be greatly reduced.  People who get paid off the books are not looking to the future. 

For those shop owners who think they can trick the system by paying with a 1099 at the end of the year, I've got some news for you.  When the IRS catches up (and they will) and discovers you misclassified an employee as a subcontractor, the would-be employer is on the hook for ALL the back taxes, including the matching S.S. and F.I.C.A.  It's UP TO YOU AND YOU ALONE to try to recoup from the employee.  Good luck with that one.

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TheTrustedMechanic Community Regular

TheTrustedMechanic

Posted
Posted
On 9/21/2023 at 9:57 AM, Transmission Repair said:

Also, don't forget about Social Security.  People who get paid "under the table" are unknowingly clipping themselves out of a lot of S.S. pay later in life.  Earlier in my career, I worked for a family who would pay us by check but insisted we cash the paychecks with them.  They had a safe in their back office full of cash.

They also had a construction company in Chicago that I now suspect took in a lot of cash, but who knows?  Now that I'm collecting S.S., I've come to realize they weren't reporting my income on the 941.  Thanks to those clowns, I'm now collecting much less S.S. than I should be because they weren't reporting my income.

I came to learn that not reporting all income comes back to haunt a person much later in their life.

Not to mention if they want to get a bank loan or a credit card or anything that might depend on their "income." Sure, it might feel nice to have that "extra cash," but anyone who wants to or is willing to work "under the table, " or "off the books" is really cheating themselves, including shop owners who skim the cash payments and only report what has a paper trial, ie checks and credit card receipts. I mean, cash payments aren't that big of a piece of the pie, are they? So, what's the big deal if I take the cash from quick jobs, it's not hurting anyone is it? (For the record, all italics are meant SARCASTICALLY and I am in no way advocating it.)

 

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  • Have you checked out Joe's Latest Blog?

    • Joe Marconi
      The Technician Shortage Is Our Fault, And It's Time We Own It
      By Joe Marconi in Joe's Blog
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      The Technician Shortage Is Our Fault, And It's Time We Own It
      Nearly every day, I hear shop owners complain: "There's a technician shortage. We can't find qualified people. There's no one out there." If that's true, then who's to blame?
      The industry? The schools? The government? I don't know how you feel, but who promised us an endless supply of qualified technicians?
      Another common complaint is that young people do not want to work in the trades. Well, if that were true, then why are other trades such as HVAC, electrical, and plumbing growing? What are they doing that the automotive industry is not? 
      Here's the reality we need to face: We do have a problem, but we shouldn't look for someone or any entity to rescue us. Not the government. Not the trade schools. Not the recruiting companies. No one owes us a workforce. If we want great people in our industry, it's up to us. At some point, we need to own up to the truth: Building a pipeline of qualified technicians is our responsibility.
      In this blog article, I will break down the key reasons we are in this situation today and what we, as an industry, can do to solve the technician shortage. Are you ready to look in the mirror?
      Have We Pushed Technicians Away?
      Let's take a look at flat-rate pay. True flat rate, which pays a technician only for the hours they produce, is a controversial pay plan that emphasizes high production levels and creates a competitive work environment that, if not properly controlled, can lead to increased mistakes and a decline in morale and team spirit. Additionally, the stress and physical demands placed on technicians as they age are not favorable to long-term employee retention. What do we do with technicians as they grow older into their fifties and begin to slow down? 
      I have heard all the arguments and pros and cons of flat-rate pay, and I am not going to judge any pay plan. Let the facts speak for themselves. True flat rate has changed in most areas around the country and has evolved into a pay plan that gives technicians some pay guarantee.
      Many shop owners have learned that team morale, along with the opportunity to earn income, is important to technicians and to the company's long-term success. But let me ask you: how many technicians have left or been pushed out over the years because of the old flat-rate pay system?
      Another issue is the workplace environment. I remember being grateful to be hired as a young technician at a local repair shop. While very thankful, the work environment was not ideal. The shop owner kept the bay doors open year-round (I am from New York) unless it rained or snowed. He felt that if the bay doors were closed, customers might think we were closed for business. We had no heat and no hot water. Many of the jobs were done outside, year-round,  in all types of weather. The starting pay was minimum wage, with no benefits, sick days, or vacation pay. 
      Now, again, I need to point out that I was truly grateful for the opportunity this shop owner gave me. I learned a lot working there, and the experience was pivotal in my career. But looking back, I wonder how many people were discouraged by these working conditions?
      While the physical demands of the repair workplace are daunting, perhaps even more critical is the culture. Too many of my generation shop owners preached the mindset of "my way or the highway." We were the business owners, after all. We started our companies, took all the risks, and provided jobs. Why shouldn't we be the ones to set the ground rules our way?   
      Many of us found over the years that the "my way or the highway" mentality was a sure way to isolate employees and make them more likely to look over the fence for greener grass. In other words, it led many technicians to seek employment elsewhere, where they felt they could be appreciated and recognized for their hard work. The issue, however, was that there wasn't much green grass around. Disappointment after disappointment, bouncing from repair to repair shop, eventually led to despair. So, I ask you: were workplace conditions a contributing factor in today's technician shortage?
      Another factor that we are all well aware of is the complexity of the modern automobile. When I started, the work was mostly physical, and you were required to master essentially three vehicle models: General Motors, Ford, and Chrysler. Let's fast-forward to today. The evolution of automotive technology, along with the extensive training and tools required, has outpaced the typical technician's pay compensation, with no clear career path. Again, leading to frustration and insecurity about the future.
      Here is the bottom line: people don't leave their job; they leave their experience. We must do a better job. 
      The News Isn't all Bad; Your Next Steps to Fix the Technician Shortage
      To fix the technician shortage, it will take a combined effort from everyone in the automotive industry, particularly automotive shop owners. Shop owners are in the perfect position to make the greatest impact, not only on their businesses but also on the future automotive workforce.
      First, shop owners must become better leaders and understand that their ultimate success is directly dependent on the people they assemble around them. Any shop owner who mistakenly believes they can build an empire solely on their abilities is destined for serious disappointment. Business owners who think like this will eventually plateau. Without the collective contributions from a team of qualified people, your business will stall; it will not continue to grow.
      Create a workplace that attracts top talent: a clean, professional, well-equipped facility designed to support productivity, teamwork, and a career, not just a job. Build a great reputation in your community by getting involved locally. Become the auto repair shop that people take notice of as "the" place to work.
      Next, shop owners must become more financially knowledgeable. Knowing your numbers and what you need to achieve for a strong bottom-line profit is essential to paying technicians the money they need and deserve. Profit will also allow you to compete with other trade industries by providing a benefits package that has real take-home value and security.
      When it comes to culture, this is where the rubber hits the road. People crave recognition, praise, and a sense of purpose. Despite what you hear, people are not just money-motivated. Once people feel secure in their financial situation, retaining and motivating technicians can only be achieved by connecting with them on an emotional level. You cannot show enough appreciation. Give out praise for a job well done as if your business depended on it, because it does.
      As technicians age, we need to have a place for them. Expecting a 58-year-old to perform like a 35-year-old is unrealistic. We need to be more focused on career pathing. Provide training, skill development, and coaching to develop leaders and mentors within our older workforce. While their bodies may have slowed, the knowledge they have gained is priceless. 
      Our future is dependent on young people entering our industry. We need to give more young people opportunities. Every shop owner across the country should consider hiring an apprentice, then build an apprentice training plan and career path for them. If every shop did this, we could solve the technician shortage within five years. Get involved with the trade schools and high schools in your area. Look into the NAPA Apprenticeship Program. Don't sit on your hands with this one. Do it today.
      Lastly, don't get left behind. Commit to ongoing training for all your employees. Keep up to date with tools and equipment tailored to your business model. Don't try to be all things to all people and all vehicles. Identify your core profile customer and the vehicles they drive, and become an expert on those vehicles and the services you offer.

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