Dino Gibraski 3 months ago
Currently, we are paying our independent contractors by the hour with trainees at $15 and experienced at $18 hr plus bonuses.
There is no motivation on their part to complete ahead of schedule or to do quality work. Most times we end up paying them again to redo the area in question with us paying labor and material costs. On top of this we supply all tools, hand held or power, and they seem to have little regard for taking care of them. We find items laying all over in the dirt and mud or thrown in trash cans at end of day like new saw blades etc. My question is how do I suddenly go from hourly pay to a set price for the fence build? Would I just get rid of current workers and bring on new staff with the set price? When we try to hire subs with tools and experience, they typically charge more than we have in the budget and do not offer warranty. At least with our own guys, we could maybe control labor costs? Thank you for the time. Dino1 Reply
Laura HandrickModerator3 months ago
Thank you for your question. It sounds like, although you are calling your workers ‘contractors’, they’re actually employees — if you provide them with tools (they don’t bring their own), and you manage their work and hours. You are correct in stating that hiring professional subcontractors with tools and experience costs more — that’s because they’re not employees — they pay their own benefits and taxes, and are typically paid by the job rather than the hour (and let’s be honest, they’re professionals, don’t need much oversight, and make fewer mistakes.) Chances are, they also provide their own work comp in case they’re injured on the job.
Here are your two options (don’t shoot the messenger) based on labor laws.
1) Hire contractors, but do so by the job, not by the hour. Pay them based on work performed (completed milestones or job) not by the hour. That provides them the incentive to complete the work. They also bring their own tools, and you don’t need to worry about tracking their hours worked. I’ve included a sample contract below to help you draft a work agreement with your subs.
2) Hire employees and pay not only their wages but pay their taxes and insurance. In turn, you’ll have more control of their work, their hours worked, how they manage your tools and you can provide them incentives for completing work on time, safely, no-do-overs, etc. That also gives you the right to monitor their time and provide closer oversight of the work they do.
In the short term, you’re in a bit of a jam. If you ‘terminate’ the workers, it’s possible one or more will file a labor law violation and win — that’s because you’ve possibly incorrectly identified them as independent contractors when they don’t meet the requirements and should have been hired as employees instead. What I would do, asap, is convert them to employees (at the same wage rate) and put work policies in place such as:
– job descriptions for each worker to clarify the job role and expectations (one for trainees, another for experienced workers)
– require them to check out tools and check them back in at the end of the day
– offer to pay for performance, such as a bonus for completing the project ON TIME and TO SPECIFICATIONS
You also need to (in most states) provider worker’s comp insurance in case one of your workers is injured on the job site.
Here are articles to help.
Laura, SPHR, MA Ed
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