Paying our hourly guys
Hello,
part of the way into our building project (small new home), our wonderful builder/contractor passed away unexpectedly. he was a one man operation and his wife was unable to help us out with
access to his computer files which would have directed us to those people Dan had lined up to do the remaining work
since then, my husband and I have been doing a lot of the work ourselves but have had to hire others more experienced for the more skilled tasks
we’ve made great progress and have been working with a 3 man team that are nice people and very skilled at what they do, we pay them by the hour
having no experience in this and going by how I am paid at my workplace (where I am also an hourly worker) I have these questions for those of you who have more experience than I
as it turns out, we are paying these guys for lunch (is this par for the course in the construction industry?)
and most days they get here not always on the dot of 8AM and leave sometimes 10 to 15 minuets before their agreed upon quitting time, I know that they work hard, but we’re billed for that time too.
input please would be appreciated.
many thanks
Anne
Harrisburg, PA
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Replies
Do you pay them directly, or is one of them in charge?
The lunch thing may have regional variations. Here in northern New England, it's typically not paid. Not that that's a good thing.
And they certainly shouldn't be billing you for time they're not there and working.
What you are doing is essentially cost-plus construction. If the economics of this approach are working for you and you are satisfied with how tasks are being completed, you might not want to rock the boat. That being said, if you have other tasks that will be completed some other subs, you can certainly asks for fix-priced bids. Just be sure that everyone is biding based off the same set of specifications.
I agree with Dan.
But I'd be a lot more concerned about whether the guys are your employees or not. If they are, you need to take out federal and maybe state income taxes, FICA, unemployment taxes, make sure you have worker's comp insurance and a bunch of other stuff. Whether they are employees or independent contractors isn't always clear. If they aren't employees, if one of them gets hurt, you may still have a problem if they aren't insured.
Sounds like they are employees to me, and as such you need to withhold and pay all applicable taxes, social security, medicare, and more. You might want to call around to CPAs and see if someone can set up payroll for you. Lunch is generally not paid, but workers get a morning and afternoon break that are, so maybe it evens out? And, the leaving early thing is classic--unless you crack down on that, they'll continue doing it and probably leave a few minutes earlier with each week that goes by. Being the boss means dealing with a lot of challenging and complicated stuff.
Anne,
I've had many hourly jobs over the years -- as a warehouse worker, roofer, and plumbing wholesale counterperson -- and I was never paid for lunch.
It's perfectly appropriate for workers to be paid for cleanup activities, of course.
There are a number of factors that distinguish employees from independent contractors. For example, if you withhold taxes, that can weigh toward declaring them employees. Different states may give different weights to each factor. If there is an injury, the distinction can get VERY important. I urge you to consciously structure the relationship so that it clearly falls into one category or the other and then ensure that you are following the correct rules for that category.
Here's what the IRS has to say about the employee/independent contractor issue:
https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee
You've got my sympathy, as I found myself in a similar situation in 2009. The construction manager I hired for a building project died in the crash of a light plane during the final stages of project planning. The first I heard of it was when the local trash haulers called me and asked "Was the guy who died the same guy who scheduled the dumpster rental." I had no idea which contractors he had gotten on board. Fortunately, I was able to contact his executor and gain access to his physical files.
I didn't have to address your precise question, because all the contractors I dealt with were state licensed businesses, and they dealt with any hour wage issues for their workers.
Generally a paid lunch comes with the understanding that the employee keeps working in some fashion. Normally they are used when the schedule is tight and a deadline is close by. I have even gone so far as buying lunch for everyone.
OSHA et al put a big crimp into this a few years ago so the practice is not very common anymore. Workers are usually required to take at least a half hour lunch and have 2 ten minute breaks during the workday as well. Over tired workers are more likely to get sick or injured. You should get a legal opinion on the subject before allowing the practice to continue.
A CPA is an often overlooked source of information and help. They can keep you out of trouble with the IRS over most payroll and other related issues.
If you are not familiar with the local building codes and other issues sometimes you can hire a construction supervisor aka "white hat" to help oversee the job. Otherwise I would suggest finding a new GC to take over. It is a lot of pesky small details that makes the difference between a good job and a bad one. Without a solid knowledge of current good practices it would be very easy for someone to pass off shoddy work and get away with it.
Good luck.