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Tom,
What a rotten shame! From what you say, I would be happy to work for you, you treat people as people and not as commodities. This guy is a real slimeball. Interesting thing is I work for the state, in a right-to-work state, but I CANNOT get paid for overtime!!!! I MUST take it as extra vacation time (at 1.5 granted). So if I want extra cash for christmas, too bad.
If there is any justice, the labor department would say that you follow the spirit of the law and are in fact an exeplary employer in your field. But I fear that Joe is right….
Good luck!!
Replies
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I just read this thread about overtime. No one has given you the most important advice yet. Get a professional to deal with the labor agency for you. You are at a severe disadvantage, as you don't know the rules and procedures and they do. You need a lawyer or accountant knowledgeable about the labor laws which apply in your area, and can negotiate on your behalf with the authorities. It may seem an expensive way to go, but in the end you will probably be much better off.
Good luck.
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He HAS a lawyer! $150/hour! Martin has a point, and I would go further -- refuse to speak with the labor folks out of the presence of your lawyer and refer them to him/her with all questions.
Let us know how this goes...
*Sincere thanks to all who replied. I appreciate the kind words, and I am trying to do what's right by my guys. I had some second thoughts about retaining counsel for this matter but I am a bit too emotional about this to maintain objectivity in my conversations with the investigator. At this point it has been requested by the DOL that I provide and accounting of hours worked by this employee during his time with my company. I turned over the records but have yet to hear back from them. I will keep you posted.I have spoke with almost everyone that I work for and around and few knew of the overtime requirement. Of course most people avoid employees like the plague, preferring the subcontractor method. I have no beef with those that rely on legitimate sub relationships, I am a sub myself, I believe that It is hard to build a team and maintain craftsmanship without the employer/ employee relationship. It is also impossible to comply with the letter, much less the spirit of the law to pay workers as subs when you pay them hourly and they work exclusively for you. Bottom line is that having employees is good for me and I intend to keep paying the associated costs. I will keep you posted as this develops as it seems to be of interest to some of you.Tom
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Tommy B.-
Here in the State of Vermont, the company I work for has an interesting loop-hole. I work as a carpenter, in the Property Maintenance Department of a large Ski Resort. The resort, being in a seasonal business, is able to keep from paying many of their employees overtime, because they only employ them part of the year. As far as my understanding goes, as long as the resort is not requiring anyone to work more that 40 hours a week year round, they don't have to pay overtime. I'm not condoning this at all. I'm just sharing a situation that might increase your view of labor laws. Was this employee brought on-board of your company for just this one job, or as a year round full time employee, regardless of your job load? sounds like you're attorney's got some work to do for you, but I agree with many others on this topic, if a guy is entitled to overtime by the law, and he works it, he should get payed for it.
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Question for Ed Williams re: workers comp -
It has been a while since I took any labor law and I haven't had any employees for while, but my understanding of workers comp was that by covering workers with workers comp, they had to take the workers comp settlement and then could not sue you for anything additional. When you go without workers comp, does this mean that you are opening yourself up to a potential lawsuit when some employee breaks his neck and claims you had not been as diligent regarding site safety as you should have been?
*Yes, so you need insurance. Whether a worker's comp settlement is preclusive of a civil suit varies with the state and the situation, i believe.
*I blurted out that the company's logic is nonsense, but like a dutiful lawyer tried to research it for a few minutes. Reading the Nolo Press literature i cited above, it turns out that these folks must have good lobbyists:>Miscellaneous workers. Several other types of workers are exempt from the minimum wage and overtime pay provisions of the FLSA. The most common include:>* employees of seasonal amusement or recreational businesses....So this is one of a grab bag of exemptions in the FLSA. No application to construction industry.
*CaseyR,Yes.Ed. Williams
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A question to all you legal eagles out there... Let's see if breaktime members can match wits or lack thereof with my $150/hr attorney.
I have my employees, generally between one and three of them at any given time, on a payroll with workmens comp and the whole deal. We all know this is costly and unusual in this business and that there are ways to supposedly beat the system. I believe that my men are entitled to compensation and wages should they be injured at work and that they are entitled to vacation, help with benefits, holidays and sick pay just like the rest of society. The one thing I have not offered is overtime wages (ie. time and a half) as my policy is that I do not require anyone to work more than 40 hrs. per week. It is not feasible for me to do so as I cannot bid work based on overtime rates and cannot bill enough to cover it and stay competitive. It is difficult enough to keep good help when they are offered similar money in cash, or as a sub as many of my guys are not sophisticated enough to realize that these are not comparable offers.
Here's my dilemma...
Some of this may be unimportant but let me relate briefly the whole incident.
A young guy (25) answers my ad for work and and says that he has carefully thought out a switch from cooking to carpentry and has planned for the switch financially and is willing to take a pay cut because he so badly wants to learn the business. He does very well and works hard for several weeks. He never wears a watch and I never look at mine except to start and quit he agrees that he would rather work for straight time than not work any overtime. Thinks are going along well. During this period on drives to jobs he mentions things that lead me to believe that his ethics are not complete. ( ie. he declared bankruptcy for 15k or so and at his atty's advice ran up his debt prior to filing, and thought this was ok because the system let him do it and nobody got hurt. ) I put aside feelings of disgust for the bad character and decided that maybe the guy was making a serious attempt to change. After three months I gave him his perfomance review, a fifty cent raise with the promise of more in three months if some performance issues were met. A few weeks later he lets on that maybe he made a bad decision getting into this line of work, and that maybe he would like to make a move back to cooking. I told him I thought he could go far in construction and that if he needed he could take a few weeks and look for work while he worked for me and made up his mind. That same day after much conversation I said "you already have another job don't you?" He says yes but that he would give me two weeks notice. Needless to say I didn't here from him until payday when he demanded his check at 7pm. He did not rember that I had told him that his check would go in the mail the following day.
A few weeks later I am notified by labor and industry that I am being investigated for overtime compliance, courtesy of you know who. I have know Idea how he was provoked into doing this. After speaking with my accountant and attorney I find that this is a law that I must pay time and a half over 40. I have not contacted the investigator as I am afraid that I may have some serious exposure here. Anyone have any thoughts that could get me out of this pickle?
Thanks in advance,
Tom
*Did you ever pay him for more than forty hours in a week's period?
*Tommy,Tell the investigators your side of the story. This guy agreed to the situation. He may admit that, he may not. Sounds like the guy is a sleaze-ball. That still don't make it right. You were wrong to let him work over 40 without time+1/2. All you had to say was no. That's the law. Live with it.Learn and go on.You disappoint me by saying that there are ways to beat the system and therefore possibly condoning them. Perhaps you're getting what you deserve?Karma,Ed. Williams
*Yes, it is the law, generally time-and-a-half for hourly employees after 40 hours in a week. My boss and I were surprised by this in a job I had out of college that was classified "temporary" hourly employment -- when my time sheets went to fifty or so personnel said I had to get time-and-a-half no matter what my employment status. It's a law meant to protect the non-management employee from exploitation.Without time sheets, it's going to be hard to reconstruct exactly what happened. Did you just pay your guys for 8 hours a day no matter what? Were they in fact working more than forty?At worst you will own back wages and a penalty, I doubt this is the end of the world. If your guys were working more than 40 they're entitled to overtime and they can't be required to give that up. I doubt they can even volunteer to give up the extra pay, at least it's going to look suspicious to the labor folks. So this will become a question of credibility. Sounds like this guy doesn't have the best record... What did your atty advise? Settle? You certainly don't want the state poking around in your business (is this Calif.?).This could be a pain in the rear if you didn't keep records because the state might want to know about all your employees. Good luck.No charge. :) (And not real legal advice, neither -- you paid for that already.)
* Tommy,
Joseph Fusco View Image
*Gentlemen:Thanks for your replies, have not heard from my attorney yet. Steve, yes I paid over 80 hours biweekly to the tune of 79.75 hours overtime over 14 weeks. Color me stupid but I did not and cannot believe this is the law. I have had several jobs where I was paid straight time or not at all for up to 500 hours overtime in a year. I hired a CPA to do my payroll for the first 18 months and he did not make me aware of this and he even asked me what my overtime rate was and I told him straight time. I hired him to do all my bookeeping relating to accounting for my payroll and to guide me through the legalities. Now the firm ( the particular cpa is no longer there) says they were only doing what I told them. Oddly enough I have a degree in accounting with honors and from a major university that did not teach me this. My state labor department say the can send me nothing that lists all the requirements I must follow but that I can find information on their website. To date, I have received no correspondence that states that I am required to pay time and a half. But as they say ignorance of the law is no excuse and I believe that. So... As to gacc dallas, I was not implying that I am looking for loopholes. I meant that other folks pay their guys as subs when they meet the test of an employee, or pay them cash. These are hard to police but are much more damaging to the economy as a whole. Interestingly, my attorney said that I should pay them as independent contractors to avoid overtime. I was having trouble doing a search of previous posts gacc but didn't you say that you dont pay comp because the rates are too high and you cant afford it? Whatever the scenario I was dissappointed to hear that your guys who you call employees are not protected by this tax( i mean insurance ). I think your are presenting yourself to serious liability or at least would be in my state. Here I was told by labor and industry that they do not have the manpower to police employers calling employees subs and that they must wait for someone to get injured before they can do anything. That strikes me as pretty dumb. All you have to do is run an ad looking for help and 3/4 of the guys will tell you they are working as subs. When I ask if they are really and employee they tell me yes and that they make out better that way cause they don't get taxes taken out. That's wrong.Andrew, this is about what I figured and I appreciate you advise. Yes guys are entitled to something extra for overtime. I frequently comp them vacation hours in addition to the holiday and vacation that the currently receive. I am also known to buy lunch, hand tools that they are required to have anyway, advance pay or loan money in times of need. Frequently I say throw an extra hour on for today, or quit early and let them take eight. I never question hours when two guys work the same schedule and have four hour discrepencies. Above all, I pay them up the maximum that I can pay for their skills. I bite my tongue when accidents have even if they are caused by carelessness. This guy was a no show with out a phone call and then lied about why and I didn't fire him on the spot. These guys make out better this way than no overtime at all. Which is what I will have to go to.I just found out that on my last frame my customer thought I was to high so I will bid against a guy that pays his guys as subs what my guys hourly rates are, I know this for a fact. My cost is about 40 percent on my labor so you can see that on a typical frame I will make fifty or so percent less than a guy like this and he can work his guys 80 hours a week with no o/t until someoneturns him in. Guess I'm gonna go back to remodels.Thanks for all your help,Tom
*It is risky to generalize because law and practice vary from state to state. Some states protect the employee, others are "right to work" states with little regulation. That's why I slipped the lawyer word "generally" into my statement of the general rule regarding overtime entitlement.You are hardly alone in being unaware of the law. A wimpy Labor Dept., legacy of the Reagan years is partly to blame. Other violations include deeming employees "independent contractors" without proper basis (this is a different use of the term from the IRS's) (Microsoft got nailed on this one and you could be too) and pretending that salaried employees performing the same discretion-less work as hourly employees are "management" exempt from OT. Oddly, giving comp time instead of OT is usually illegal; if comp time is allowed, it must be awarded at time-and-a-half.Visit the Nolo Press site at "Fair Pay and Time Off." It is a thorough summary. Although I did take "Labor Law," that's the sum total of my experience and i wouldn't try to offer professional advice in this area. I am aware of some of the pitfalls, though, and it appears you found one too.Again, remember that state law is important here, too. This area is complex and you definitely need good professional advice.P.S. If you visit Nolo, check out the material on independent contracting ("Self-Employed Workers") at the bottom of the table of contents.
*Hi Tom,Did you suffer any damages because he left without notice for those 2 weeks, if so put in a claim to labor.Gabe
*Tom,What a rotten shame! From what you say, I would be happy to work for you, you treat people as people and not as commodities. This guy is a real slimeball. Interesting thing is I work for the state, in a right-to-work state, but I CANNOT get paid for overtime!!!! I MUST take it as extra vacation time (at 1.5 granted). So if I want extra cash for christmas, too bad. If there is any justice, the labor department would say that you follow the spirit of the law and are in fact an exeplary employer in your field. But I fear that Joe is right....Good luck!!
*Hi Fellows,Tom's complaint is a fairly common one and maybe one worthy of analysis.Just as codes vary State to State, Province to Province, so do the labour laws and their enforcement.If we assume that Tom's story is accurate, let's restrict our comments to that possibility.Tom is in business with experience in payrolls. Most jurisdictions would then place the onus on Tom to be informed of all current labour laws in his area. Ignorance of the law is no excuse, where have we heard this before.The worker in this instance, accepted the terms of employment with Tom by not complaining at the time of payment about the lack of overtime. If this were any other aspect of contractural agreements, the worker would be out of luck. But in most labour laws, it by itself means nothing. Most labour laws that are in effect today are not as a result of caring for the poor worker, but on how to better tax the relationship between the two. Governments like to have everyone in the country, as employees. They are easy to trace and collection of the taxes is heaped upon the employer. They generally have no noticeable deductions as compared to self-employed contractors.Joe is absolutely correct is that Tom better grease his butt with vaseline prior to the visit from the inspectors. They will assess the entire history of the company, will collect all overtime and will likely fine an equal amount for themselves.Going into business is a serious business. It is not simply a matter of "gee the boss gets 100 bucks for doing this and he only gives me 25 so the hell with it, I'm going into business, after all how hard can it be."Part of going into business is learning the business and the associated risk involved.My hats off the the guys who are successful in the long run because a few of us know the hardships in success.Any other thoughtsGabe
*Many years ago I was an manager trainee at a pizza chain franchise. Manager trainees normally worked a fifty five hour week. The last fifteen hours at time and a half. For example, forty hours at $4.00 per hour ($160) and fifteen hours at $6.00 per hour ($90). This comes to $250.00. In any discussion of the position, it was considered to pay $250 per week.The normal practice when a manager trainee missed a day of work was to figure the pay as if he or she did not miss and then to subtract $50.00, so if you worked four days (44 hours) instead of five (fifty five hours), you would be paid $200.00 instead of the $160 plus $24 ($184).Federal Wage & Hour got into the companies records for some other reason and found this. They reasoned that if the employee was paid $200 for fourty four hours, then their true wage must be $4.35 per hour and so they were underpaid all the rest of the time.My employer reached a settlement. I got like a check for about $400.00 after I signed a release. My understanding was that some of the people that received these checks, signed them back to the company. Those of us that didn't found the total cost divided up and expensed on each of our store's P & L (and so taken out of our bonus).Rich Beckman
*If you are making an employer's contribution to health insurance, workers comp, and offering paid holidays and vaction time these costs are a component of the "true" basic hourly rate. It may not pay a small building contractor to work employees overtime but, if you have significant benefit costs it is possible overtime (at time and a half) can work out to be cheeper than regular time. One issue that Unions face when the economy expands is "mandatory overtime." Employers resist hiring new workers because it is to their advantage to work the current force overtime. FYI - Holidays, and Sundays are double-time!
*Hello Everyone, I live in Texas, and a couple of months ago I went through a similar investigation. I was accused of listing and paying employees as "Independent Contractors". My state, and the Federal Governement have a list of requirements for each person to meet before they can be considered "Independent Contractors". 1. I cannot control their hours (i.e. tell them to be there at 7:00 am, and quit at 5:00 pm. They must set their own hours)2. I cannot pay them by the hour, unless hours have been calculated for a total job (i.e. I cannot tell them I'll pay them $20.00 per hour, and then they hand me a time sheet for payment. I can pay them per job if I, or they, did the bid for man hours, and I pay them according to the bid and not according to actual hours worked)3. They must (to be considered legal Independents) carry their own Liability Insurance, or be listed on my policy as Sub Contractors.4. I must issue a form 1099 at the end of the year listing them as a Sub Contractor. These were the only four things that were at issue when I went before the "Kangaroo Court". I was found to have violated the Insurance listing, and was only given a warning. I was very lucky, and I have been checked out since to make sure that I am comlying. I am now making all "Independents" that work for me provide their own Liability Insurance, or they don't work with me anymore. Most have no problem with this, and the ones that had a problem are working elsewhere. I own a small company (I am basically the only employee) and sometimes I need help, or need specialists to work on a particular part of a job. I have been hiring people in the past to help me out when needed. Sometimes they work well over 40 hours in a week (if it's a big job), and sometimes they work 10 or 15 hours a week. When I am not using them, other Contractors just like me are using them. This works out very well for the Contractors, but most of the Independents do not file their own taxes, nor do they do any kind of book keeping of their own. When they get into trouble with the governing agencies, they almost always blame the Contractors and tell some big whoppers to get the agencies off of their back. This is where accurate, detailed book keeping on the part of the Contractor comes in. If we do not keep these accurate and detailed records, we can get burned very badly. I was lucky. I had all of my records, and they were accurate. Just thought I'd tell you about my experience. Maybe it can help someone avoid the mistakes that so many Contractors make. James DuHamelOwner, J & M Home Maintenance Service
*Sorry to hear of your difficulty. Over the years I have learned to keep an envelope for each month's timecards as well as any benefits paid. Each quarter, I place these in a larger envelope with the 941's etc. Last spring I was audited by the state, however, as the error was only $5.00 for three years, no problem. The auditors are generally polite, but firm and human beings just like the rest of us. Give them all the data, a pleasant place to work and all will come out as best it can. Basically, you did a lottery in that you underbid your jobs with the idea that everybody else was doing the same. Unfortunately, your number came up. Good luck,Dennis
* Tommy,
Joseph Fusco View Image
*Hi Tommy B.I think it is the Fair Labor Standards Act which talks about minimum wages and overtime.You could begin research at ASK JEEVES at http://www.aj.com.From there, get the applicable Labor Code in your state. Maybe ASK JEEVES can help with that too.As far as that guy goes...I dont think it matters too much what he looked like, whether he smiled, or how could he not call on the phone.The man who might complain, about anything, will have any number of characteristics, good or bad.Did you leave yourself vulnerable? Did you know that the man was working overtime? Did you allow it, thinking yourself worthy of some entitlement? Or was the man's effort gratuitous after a set time?I have read this post. I dont think I read information about the hours worked. It seems to me that if you knew the man worked hours after the forty hour workweek, or hours after the eight hour day, and you paid him straight time rather then overtime, because thats your policy, then thats what is called prima facie evidence, and likely you will have to pay the difference, maybe something else like a penalty.Now, if the man worked his forty hours and got enthusiastic about his learning and then gratuitously worked on his own...thats different. Then, I understand why you might be surprised by the claim.More information please....
*Tommy B.,I too live and work in Texas (Dallas). Since 1991 we are no longer required to have workers' comp in order to be in business. Before that we were required to buy it. My comp rate for carpenters was 24.4% of wages when the law changed and I dropped it. In other words, I paid 24.4 cents to the insurance company for every dollar I paid a employee. You do the math.When people pay employees as independent contractors all they are doing is hurting the employee. He pays double the FICA and has to make his own quarterly payments to Uncle Sam. I can't tell you how many employees I have hired in the past only to recieve a letter in the mail from the IRS telling me, no ORDERING me, to lien thier wages where I can only give them about $120.00 a week take home. The rest I send to the IRS. THAT'S the law, and if I don't do it, I get the fine...serious fine. Needless to say when that happens, they quit. 100% of the time, the reason the IRS is after them is because in the years past, they worked "contract labor" as an "independent contractor" for some builder who said he was doing them a favor. Yeah right. Some favor. Sure, they take home more pay, but if the truck breaks down or the kids get sick what are you going to do? Pay your quarterly taxes, or get the truck fixed and get the kids to the doctor.I agree with everyone that paying an employee as a contractor should be a crime. It's not legal, and I see it a crime against the employee. The employee has no choice. It's take it or leave it. For a man out of work, taking a legal stance does not get the bills paid. The people who pay thier employees that way should be held accountable. They are just trying to skate around thier responsibilty as an employer. Being in business is not a game. The IRS is not someone to mess with. I pay my employees, all 17 of them, as W2 employees, not contractors. I can't afford the extra 24.4% overhead that comp cost. To do that I would be out of business. I can't have comp and compete with the "businessmen" in my trade that pay thier employees as contractors.Yeah, I'd love to have comp. I could if everyone played by the rules.Hey, sometimes life ain't fair...get used to it.Ed. Williams