the answer is hire a company to do installations for you. if your employee just happens to own that company, well, oh well…
It’s all invoices. Pay them as normal, and you don’t need to worry about taxes, etc. Your employee (or sub’d company J…) does that on their own.
Where the problems come in are, that paying someone peice rate does NOT NEGATE the requirement to pay overtime for Employees.
Nor does it Negate the IRS's definition of what an EMployee is and a contractor is.
You have to restrict employees to work less than 40 hours or prepair to pay time and a half for your peice rate. If an employee works 60 hours, and completes three installs at in that week, at a peice rate of $100 each you would pay the employee.....
$300 / 60 hours = $5 per hour. Overtime (20 hours) would be paid on $100 of the pay. Addtional over time pay (half time) would be $50.
Total paycheck would be $350.
If it took them 60 hours to just get two installs done, they would be less than the minimum wage.
So there are two requirements....
1) You must have a minimum pay, calcuated on the total number of hours that THEY record working.
2) Must figure out someones average hourly rate on a weekly basis. This complicates the accounting duties, and forces the account to custom pay each employee each month.
Two problems that can occur are...
What if you want to pay an employee well, because they are really doing a good job, and then one week they decide to go really slow? You end up paying someone a huge amount of overtime unexpectedly!
What we learned was that a employee's record of stated hours worked was accurate. So paying peice rate does NOT NEGATE the need of the management to record and manage the hours worked by an employee. We learned, that an Employer is NOT responsible for their productivity the employer is. So if they go to the movies all day without you knowing it, and work late to get the job done, you still owe them the overtime, regardless of what flat peice rate you negotiated.
These are some of the reasons that we chose to put employees on Salary instead of Piece rate. We live in a sue happy county. We just plan on everyone taking way to long for an install, and put very low expectations on what they are expected to accomplish, and we save on management and accounting salaries. If they get done early, we have them do other things. I won't talk about what happens if they don't get their work done, thats handled on a case by case basis. So we chose salary for ease. IF they consistently do well, they get a higher salary and stock options. It creates a team effort, not a what do I get mentality.
I don't know if that is the right decission or not, it really takes our guys a long time to get things done. I often consider whether I should migrate back to peice rate.
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