According to the DOL (department of Labor) an employee can be paid by
the hour or for piece work (by the job)|
The Act requires employers of covered employees who are not otherwise exempt to pay these employees a minimum wage of not less than $5.15 an hour as of September 1, 1997. Youths under 20 years of age may be paid a minimum wage of not less than $4.25 an hour during the first 90 consecutive calendar days of employment with an employer. Employers may not displace any employee to hire someone at the youth minimum wage.
Employers may pay employees on a piece‑rate basis, as long as they receive at least the equivalent of the required minimum hourly wage rate. Employers of tipped employees (i.e., those who customarily and regularly receive more than $30 a month in tips) may consider such tips as part of their wages, but employers must pay a direct wage of at least $2.13 per hour if they claim a tip credit. They must also meet certain other conditions.I suppose that if these guys manage to spend over 20 (10 hrs each) hrs on every install for the pay period, then I would have to adjust their pay to bring them up to minimum wage. That hasn't been a problem. They average about 3 hrs/install including drive time. This is about twice as fast as installs got done back when they were paid hourly. This is a win/win/win solution as I see it. The employees like the method for making extra money. The customers like the techs getting in and out in a reasonable time. I like getting 2 or 3 installs/day vs 1/day like we got back when techs got paid per hour.
We treat their install pay just like regular income. We withhold the withholdings, deal with the social security, etc.
Lincoln Welder mfg company in Ohio pays EVERY employee piece-wage only. You might get $4/ea to wind motors, $2/ea to install a switch, $7/ea to screw wheels on, $1.50 to inspect parts, etc.
They have withholdings, pay social security, etc. They even clock in/out, to insure to OSHA that no employee is working more than 120 hrs/week but this method has been in place for years and works very well. The employees love it and the unions hate it. It insures that the new guy in training gets up to speed in a reasonable time or washes out. The guy who has been there for 10 years can handle 10 $4 units/hr can make decent money.
Scott Reed wrote:
You might want to check with your accountant. I doubt the IRS is going to let you "contract" with people you also employ. You may be liable for FICA, etc. for all the installs they have done.
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