Tommorow I meet with my potential new bosses to iron out a job description,pay rate + percentage of the profit plus pay for work or use of tools etc.
So far they discussed splitting the company into 2 divisions(new construction and remodeling) and I will manage the remodeling end and help on bidding and takeoffs.
I want any suggestions as to what to put in a contract for this position?
1. I would like a credit card for expenses such as fuel and materials.
2. Two weeks paid vacation.
3.A retirement fund.
4. A window to renegotiate my percentage and or salary every 6 months dependant on performance.
5.Maybe wave health benifits in lure of more money.
6.?
ANDY SZ2
I MAY DISAGREE WITH WHAT YOUR SAYING BUT I WILL DEFEND TO THE DEATH YOUR RIGHT TO SAY IT.
Remodeler/Punchout
Replies
5.Maybe wave health benifits in lure of more money. I wouldn't do that. Take the benefits. (And it's spelled "lieu".)
On the gas money...why not just submit an expense account monthly (or weekly or whatever) for mileage at $0.34 or what's current. The card for misc job expenses would be a nice touch.
4. A window to renegotiate my percentage If your performance is good, then the money will follow cuz you'll be getting a percentage of your improved efficiency.
What about a company vehicle? Is a Hummer too decadent?
Whenever you are asked if you can do a job, tell'em "Certainly, I can!" Then get busy and find out how to do it. T. Roosevelt
One of the bosses already has a hummer with supercharger.
I already have truck and trailers, one with tools and a large dump trailer.
It would be alot easier if I didn't have to keep track of mileage and my oil changes cost 50$.
Wife works at the V.A. and so what ever health package will probably not come close plus I would have to pay some of the premiums.I MAY DISAGREE WITH WHAT YOUR SAYING BUT I WILL DEFEND TO THE DEATH YOUR RIGHT TO SAY IT.
Remodeler/Punchout
I more than paid for my previous car with personal vehicle miles on projects. Had a tech in one office who put on (legitimate) miles like a GC does. Was about an extra $25,000 in his pocket each year for maybe $5,000 of fuel and vehicle wear. And that net of $20,000 is untaxed! So it is like $27,400 pre-tax.
David Thomas Overlooking Cook Inlet in Kenai, Alaska
Edited 5/2/2004 1:56 am ET by David Thomas
>> (And it's spelled "lieu".)
But you missed waive.
And benifits...but I was trying to be nice and offer a bit of constructive criticism, not pick apart his grammar. Like a moot point...some thiings just stand out as not being typos...
Whenever you are asked if you can do a job, tell'em "Certainly, I can!" Then get busy and find out how to do it. T. Roosevelt
Gee I work 12 hours and come here and type and my command of the English language seems to have left me. I'll do better next time.
ANDYSZ2
PS
6. Desk and filing cabinets, business cards ,and bookshelves and a giant dry erase board.
7.I want to set up log books on each jobsite with the subs entering who what they did and any problems they have.I MAY DISAGREE WITH WHAT YOUR SAYING BUT I WILL DEFEND TO THE DEATH YOUR RIGHT TO SAY IT.
Remodeler/Punchout
Andy, good luck and have FUN on your new job.
Before you meet, make a chart with five columns.
Col 1; Deal killers, those thing that you want that are not negotiable; minimum salary, vacation, they got to hire your JD nephew, etc.
Col 2; Things you really want, but are willing to talk about, Nice salary, three weeks vacation, etc.
Col 3; Things that are easily negotiable, card vs expense account, sexy secretary vs person friday, etc.
Col 4; Things you don't want but will live with if Col 2 gets better.
Col 5; Deal killers, things you won't put up with, you got to hire the bosses JD nephew, etc.
When you have a clearer idea of what you want and need, it makes it much easier to horse trade with another. It gives you a game plan or blueprint, so to speak.
SamT
Didn't mean it to be a criticism...just trying to advance your education. Typos are one thing...no point in mentioning them unless they're funny or bizarre. I assumed you didn't know the correct spelling and just tried to be helpful.
Some times the mis-use of grammar or incorrect words etc bugs me. Like when the tv station reports that the welders started a fire with their blow torch. Or when people refer to steel in concrete as rebarb. Or when they say a sidewalk is made of cement. Or when DW says someone got away with something and they got off scotch free.
Whenever you are asked if you can do a job, tell'em "Certainly, I can!" Then get busy and find out how to do it. T. Roosevelt
rebarb ...
that's when the same fish hook sticks the same finger twice!
while unhooking the same damn fish .....
Jeff
i hate that fish .....Buck Construction, llc Pittsburgh,PA
Artistry in Carpentry
Sitting here laughing until it hurts!!!!!!
I will not forget that one.
ANDYSZ2I MAY DISAGREE WITH WHAT YOUR SAYING BUT I WILL DEFEND TO THE DEATH YOUR RIGHT TO SAY IT.
Remodeler/Punchout
You mean like when they sheet the roof with plywood on a track home?
How does hot water heater grab ya?Who Dares Wins.
"Tommorow I meet with my potential new bosses to iron out a job description,pay rate + percentage of the profit plus pay for work or use of tools etc."
Andy,
Hope this isn't coming too late.
I love negotiating. Not 'cause I like to "get the best deal" but because it really is about creating the the best win-win between two parties. That much said........
LISTEN,............... think on the fly,.... but at the same time,.. postpone any commitments you can, so you have time to mull it over later. ie. if they say health ins. costs are sky high, try to pin them down to a range, then at a later time, propose your alternate plan that would get you more $$$, and "save" them money.
Also, DEFINATELY pin them down on approximate dates for future reviews, and specify what will take place then.
Hope this helps.
Jon
Meeting is in a couple of hours.
I think I will try and negotiate for half the value of health benifits to go to salary and keep using my wifes.
I think every 90 days there should be a sit down review with profit, efficiency, subs performance and clients assessments all discussed to see where we stand and then reassess pay.
ANDYSZ2I MAY DISAGREE WITH WHAT YOUR SAYING BUT I WILL DEFEND TO THE DEATH YOUR RIGHT TO SAY IT.
Remodeler/Punchout
"5.Maybe wave health benefits in lure of more money." and "I think I will try and negotiate for half the value of health benefits to go to salary and keep using my wifes."
Too late to stop you now but I really have to agree with Ed on that one. Two reasons. One the benefits you get as as part of a group dollar for dollar will always beat what you can purchase on your own as an individual. And number two, if you take the "more money" with the idea that you'll purchase your own health, life, or supplemental insurance that extra $1 when you take it as compensation is now only at best ¢.75 since it gets taxed! The benefits you earn as part of a company plan are pre-tax so again you are making out even better.
And re: "1. I would like a credit card for expenses such as fuel and materials." I would ask for a debit card as opposed to a credit card since credit cards cost money to use in both fees and interest. Asking for a debit card shows your already thinking about saving your employers money and not just spending it willy nilly.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
"the benefits you get as as part of a group dollar for dollar will always beat what you can purchase on your own as an individual"
Jerrald,
Maybe, maybe not.
Most company health and life is purchased via a group plan, with a flat rate premium per person or family. A single young male adds the same cost to the company as a childbearing age female, or a sixty year old. All of which will likely have very different near-term healthcare needs.
If you are a single male, less than 40, IMO, better to take the extra $300. to $450/month up front, and find your own plan individually.
I did that for years before I got married and fell under my wife's. I'd venture to guess I netted about $12K in savings over that time by taking that route. A single young male should be able to purchase a $1000/($2000 80/20 co-pay) deductible policy for less than $100/month.
Payback/breakeven on that is a matter of months.
Jon
Jon, I'm not talking about the differences between single male vs childbearing age female vs family programs which is what I used the phrase "dollar for dollar". Dollar for dollar the value buying power in a group is greater than in an individual with regard to health insurance and still what you are talking about doesn't get around the fact that the $300 to $450/month that you are suggesting to take as cash is going to only be ±$225 to ±$337.50 real dollars of buying power after it's been subjected to payroll tax deductions.
In addition to the advantages to the employee it also a better option due to tax advantages for the employer to compensate employees with health benefits rather than cash so if I'm an employer (and I am) and you (as an employee) want cash instead of the $300 insurance benefit I offer I may only be willing to give you $250 which would then translate into only ±$187.50 after it's been subjected to payroll taxes.
re:"A single young male should be able to purchase a $1000/($2000 80/20 co-pay) deductible policy for less than $100/month." Well that all depends upon the state you are in and even then some health insurance programs are better than others and will have different costs associated with them.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
"instead of the $300 insurance benefit I offer I may only be willing to give you $250 which would then translate into only ±$187.50 after it's been subjected to payroll taxes."
Jerrald,
(1) why only $250? vs. $300?, and (2) $187 still nets an extra $87. in the employee's pocket/month.
As an aside, the "plan" I worked out with my employer, which has proved so popular 1/3 of the guys I work with now have it, was to give up ALL accrued benefits, and take their cost as an hourly wage increase. This alone raised my real wages several $/hr. And at the same time, allowed my employer not to have to amortize allocated benefits across the hypothetical 40/hr workweek.
Under my "plan", if you want off, you just ask. No "well you have no accrued vacation time." If things get a little slow, We (the higher paid staff) volunteer, thus saving the company on unemployment ins. When we need to work OT, it is in fact time and a half. (with benefits, it really isn't)
Gist of it all is, for me, I come out ahead making 30% more,. and having lots of job flexibility. When an employer's benefits' account for 30% of payroll, they still have to pay them, wether they need you or not.
Jon
Edited 4/30/2004 2:24 pm ET by WorkshopJon
Re: "(1) why only $250? vs. $300?, "
Why as an employer would I only be willing to pay you an additional $250 vs the $300 I would be willing to contribute towards a health insurance program? Because the government, depending upon your state and how your business is set up (C Corp, S Corp, or LLC) will give a business a tax break for providing employee health insurance where they don't give any tax breaks for just paying you a higher wage. You want the money instead of the benefit that going to cost me more as a business so I'm not going to give you as much. That's one of the things the government does to encourage businesses to provide health insurance benefits to their employees.
"(2) $187 still nets an extra $87. in the employee's pocket/month"
I just arbitrarily choose the figure of a $300 per month health plan. However according to the National Construction Estimator data circa 2001 the projected national average for health insurance contribution was $505 per employee! But the point is if I as an employer are willing to contribute $300 towards the company health plan I am not going to be willing to give the same amount as a cash benefit since there are no tax advantages for me the employer to do that. So if I give you only an additional $250 as cash after taxes are deducted it's only 187.50. As an employee I've just surrendered $112.50 of value to both my employer and the government.
Yeah if I then go out and spend $100 on a health plan sure I then have $87.50 in surplus cash but I am stuck with a $100 health plan where all the other people in my company have a much much better plan that they got with my employers $300 health coverage. That's sort of analogous to me giving you $150 to buy a Metabo Quik Change Grinder and then you go out and buy a Chicago Electric Grinder from Harbor Freight for $55. Sure you now have a surplus of $95 but you also have a lousy Chicago Electric Grinder.
If you compare apples to apples and oranges to oranges with regard to health plans you will always get more bang for the dollar with a company group health plan as opposed to one you purchase yourself.
"As an aside, the "plan" I worked out with my employer, which has proved so popular 1/3 of the guys I work with now have it, was to give up ALL accrued benefits, and take their cost as an hourly wage increase. This alone raised my real [actual]wages several $/hr. "
Of course it raises wages but you lose that in the real value equation so you are really getting less. I don't know the specifics of your deal with the company but I very seriously doubt it works out in the plus column in terms of value to the employee otherwise there would be a revolution in the work force nationwide where everyone would want higher wages instead of benefits. It just doesn't work out the way your thinking it does. Really ask a professional financial advisor.
"And at the same time, allowed my employer not to have to amortize allocated benefits across the hypothetical 40/hr workweek."
And what so hard or difficult about that? I don't know if you saw the discussion or not but in post #41053.40 of the A PROOF Style Markup Excel Worksheet topic Hiker said:
That true of most benefits. Fairly significant increases in benefits don't hike up the resulting billing rates as high or as fast as most contractors would think.
And here's another reason in addition to tax advantages as to why it's better for an employer to offer benefits over a higher wage. Workers Comp is based on payroll so if I reduce my actual payroll by the $300 (or whatever) contribution I am making to health insurance I am also NOT paying the Workers Comp insurance on that $300!
Jon I not sure I'm getting all the logic of what your saying in you last two paragraphs but there is no way that I can see where you could possibly be making 30% more out of a deal like that. No way! I cannot possibly see the math working out and if it was really true you should write out your plan, put it in a book, and sell the concept in an infomercial. Negotiate Lower Benefits and Make 30% More Money! Maybe that's me being unnecessarily facetious but it just doesn't work out like your thinking in the grand scheme of things. Otherwise like I said everyone nationwide would be doing it and unions all over the country would be renegotiating their contracts.
As for "When an employer's benefits' account for 30% of payroll, they still have to pay them, wether they need you or not." If they have a problem knowing whether or not they will need you or not especially in the building and remodeling market we are in right now then they have a serious productivity and project management problem on their hands that will sooner or later catch up to them and bite them in the butt.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
My wifes insurance is a much better deal than theirs.
I took the job with some issues left open but I can iron them out as we go.
One of the decisions was to leave it as a subcontractor instead of employee which should be more advantagious to me and them.
The remodel side has 3 complete gut and addition jobs in different stages with more kitchens and baths in the works.
There is a large amount of custom homes adding up to about 10 mil. Then there is 6 spec homes that are in different stages of completion they are in an idea location and they got the lots dirt cheap.
Their workload is a bit over whelming but I see room for major improvement on efficiency and they are hiring an office manager as well.
I start in a week and have taken my first set of plans home to review job coming up.Plans are 20 pages for a remodel and addition. they even have 2 pages dedicated to demolition listing what comes out of every room!
ANDYSZ2
I MAY DISAGREE WITH WHAT YOUR SAYING BUT I WILL DEFEND TO THE DEATH YOUR RIGHT TO SAY IT.
Remodeler/Punchout
So you didn't get the job. There using you as a sub, correct?Who Dares Wins.
Yeah, except I am getting a percentage of each job to supervise and paid for any work I do with the option to renegotiate at any time.
But its definately a good deal for them because they don't have to come up with benifits and vacation etc.
Still have many details to workout and I think I am leaving me a way out without hurting either sides feelings.
All in all it is probably a good move for me without giving up my company and all that comes from being small business owner.
ANDYSZ2
I MAY DISAGREE WITH WHAT YOUR SAYING BUT I WILL DEFEND TO THE DEATH YOUR RIGHT TO SAY IT.
Remodeler/Punchout
"I took the job with some issues left open but I can iron them out as we go."
Andy.
Glad to here it sounds like it worked out. IMO, better to have the time to think, then get backed into a corner. Plus, you have the time to prove yourself.
Jon
Jerry,
Boy, you don't hold back. Do you really want to get get into a flame here? You said enough there to start a 1/2 dozen threads. Plus, you do contribute a lot here,. and I'm sooooo tied of fights.
It's a Friday night, and the wife want's a baby, so......I DON"T HAVE THE DESIRE TO GO THERE NOW.
Lot's of good points (and bad) you made. Maybe tomorrow.
Jon
Jon, it's nothing personal and my comments are not intended to start a flame war but to make a strong point. I can't see the numbers work in the scenario your describing and really if what you were saying were true everyone would be doing it,...that's all. I think saying something like you can make 30% more by taking cash over a benefit package is both inaccurately exaggerated and consequently dangerously misleading.
Offering compensation through benefits is the win-win situation for both employer and employee, not what you're describing and I spend a fair amount of time showing the contractor consulting clients I have just that. Most contractor business owners only see providing benefits as an additional cost because they fail to see the bigger picture. I'll confess I have never heard the employee's view logic you are presenting before today and I just don't see it working the way you see it, sorry. I am however very interested in hearing what you think the bad points are surrounding what I've said.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
"Offering compensation through benefits is the win-win situation for both employer and employee,"
Not when the employee does not want/need the benfit as was the orginal case in this thread.
In fact it can cause the oposite reaction.
One reason for the popularity of caffiteria plans.
Well Bill that is technically correct in the very specific case where an employee has benefit coverage through a spouse however it can also be argued that you can never have too much insurance. That's what gave rise to supplemental insurance programs such as what you see from a company like AFLAC,
Cafeteria plans are really the best option but they are generally more difficult to administer and in the case of really small companies (3-5 employees) often impossible to implement. First things first I think I'd just like to see a lot more employer contractors providing benefit packages for their employees (cafeteria or otherwise). They (the employer will benefit from the tax incentives) and employees will benefit from higher quality benefits provided at a lower cost. Maybe then we as an industry can begin to attract the youth in this country and get them to see building and remodeling as a respectable career choice and help ease the labor crisis we are facing.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
"That's what gave rise to supplemental insurance programs such as what you see from a company like AFLAC,"
I have not seen the current offerings from AFLAC, but what limited I saw in the past it was junk insurance.
" it can also be argued that you can never have too much insurance."
Any thinking person can very readily argue against that. You have to look at the COST and BENIFITS.
At one time AFLAC was big on Cancer Insurance. Well that is all fine and dandy, but what happens if you have a heart attack or a stroke. The cost of that policy would be much better "spent" buying additional healt insurance or putting it into a health savings account.
If you notice you can't "buy" AFLAC insurance. It is only "sold" through employeers.
This gets me to another point. The distortion of value of these "benifits" because of the tax structure.
Years ago the "company town" and the "company store" that limited the options and fixed the cost to the employee was deemed opresive.
Why not these so called "benifits".
Bill re:"I have not seen the current offerings from AFLAC, but what limited I saw in the past it was junk insurance."
Well you might want to take a look again and AFLAC is not the only company just the one I am most familiar with. And just what is, or what constitutes "junk insurance"?
'Any thinking person can very readily argue against that. You have to look at the COST and BENIFITS."
Well duh yeah but according to either a government or university study I read within the last year (point being it was NOT an insurance industry sponsored study) roughly 2 our of 3 people are under-insured so generally speaking I still stand by saying "it can also be argued that you can never have too much insurance."
"At one time AFLAC was big on Cancer Insurance."
To the best of my recollection or as I understood it that was because the owner founded it because his mother was stricken with cancer and the care that wasn't covered nearly ruined his family. Having been there myself (not cancer but having our family experience the same kind of trouble from being underinsured) I understand the sentiment. AFLAC has since it founding expanded into other areas of supplemental insurance.
"....but what happens if you have a heart attack or a stroke"
AFLAC only provides supplemental insurance. Not general health insurance. And they now provide coverage plans that deal with the consequences of heart attack and stroke (among other things0 and if I'm not mistaken all their plans are provided on a cafeteria basis.
'If you notice you can't "buy" AFLAC insurance. It is only "sold" through employeers."
Well yeah that's sort of unfortunate but there are probably other insurance companies out there that will sell supplemental insurance to individuals (albeit I am sure it's at a much higher cost).
"This gets me to another point. The distortion of value of these "benifits" because of the tax structure.
Years ago the "company town" and the "company store" that limited the options and fixed the cost to the employee was deemed opresive.
Why not these so called "benifits"."
Huh? I don't know what you mean there or are getting at.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
>>roughly 2 our of 3 people are under-insured so generally speaking I still stand by saying "it can also be argued that you can never have too much insurance."
That is kinda like saying "Some contractors don't have enough work, so it can be argued that a contractor can never have too many signed contracts."
Logic fallacies: Ignoratio elenchi / Irrelevant conclusion
"The fallacy of Irrelevant Conclusion consists of claiming that an argument supports a particular conclusion when it is actually logically nothing to do with that conclusion."
What does some peoples level of acquired insurance have to do with someone elses level of need for insurance. Are you really trying to say that because some people don't have enough health insurance, those who can afford it should buy more. Or, if some people are starving, others should eat more?
Reminds me of my mom when I wouldn't clean my plate(|:>)
SamT
JJH: ...roughly 2 our of 3 people are under-insured so generally speaking I still stand by saying "it can also be argued that you can never have too much insurance."
SamT: That is kinda like saying "Some contractors don't have enough work, so it can be argued that a contractor can never have too many signed contracts."
No, it not like that at all (logically that is). You're quoting a logic premise here but the statements you are comparing aren't related at all. And furthermore I never made an absolute conclusion in the statement I made. You'll notice in the statement you are quoting I said "generally speaking".
"Are you really trying to say..." Not to cut you off Sam but you're putting words in my mouth, don't do that. What I said earlier (msg#42825.10), the root cause of all this babble, was that I agreed with Ed, take the Benefits Package over the Higher Wage Compensation. That is what I said and then I explained my thinking.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
"AFLAC only provides supplemental insurance. Not general health insurance. And they now provide coverage plans that deal with the consequences of heart attack and stroke (among other things0 and if I'm not mistaken all their plans are provided on a cafeteria basis."
What I am getting at is if you need supplimental insurance then it should be triggered by any long term and/or high expense problem reguardless of the cause.
""This gets me to another point. The distortion of value of these "benifits" because of the tax structure.
Years ago the "company town" and the "company store" that limited the options and fixed the cost to the employee was deemed opresive.
Why not these so called "benifits"."
Huh? I don't know what you mean there or are getting at."
Back in the 30's the company set the rents for the company houses and set the price for a can of beans at the company store. Often set so that they keep the employee indebted to the company. The employee did not have much choice in a company town.
Now companies are offering so called benifits. Again these are not nessecarily what is best for the employee, what the employee really wants, or the best cost.
The only reason that they are "benifit" is because they are artificialy priced by the tax codes.
BTW, do you know how and why health insuracne became an company provided benifit.
Okay Bill now I've got ya. Or maybe I don't. Do you object to benefit packages being like "Golden Handcuffs", a tie that binds a employee to a particular company because were they to change jobs they would lose their benefits? There is a (unfortunate) lack of "portability" to benefit packages.
"Again these are not nessecarily what is best for the employee, what the employee really wants, or the best cost."
In many companies (mine included) the employees are involved with designing the company benefit program. But even with that kind of employee involvement it's ademocratic process and subject to compromise so your never going to please everyone.
"BTW, do you know how and why health insuracne became an company provided benifit."
No, I do not know why health insurance became an company provided benefit.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
"No, I do not know why health insurance became an company provided benefit."
During WWII there where wage and price controls. The companies could not increase the wages that they paid had to come up with another incentive.
It was health insurance.
"Do you object to benefit packages being like "Golden Handcuffs", a tie that binds a employee to a particular company because were they to change jobs they would lose their benefits?"
NO!
What I object to is that you can provide the benifit at a discount using tax money.
I just want to add something to the benifit package gig.
A while back I negogiated with the city with out benifits . It was really a stupid thing for me to do as it turned out. The reason I say that is because they never valued benifits pro or con. Absolutely true.
Vacation, sick leave, insurance , holidays were never valued in any way.
I think it pays to listen to whats important to the folks that are doing the paying. Oddly enough all people dont figgure. Some folks are desperate to just get the job done with accuracy. Some folks are blinded for some darn reason of dealing with all the numbers which you exibit as normal business.
Strange thing, people .
Tim Mooney
First, company benefits are non negotiable. If you have benefits available for anyone including the boss they must be available for all employees. What you do for one you must do for all.
Second, IRS has clear rules for what is and is not a sub-contractor. These are the main ones:
Does the business require the worker to follow their instructions on how work is to be performed? If yes, this indicates employee status. An independent contractor will generally decide how the project should be completed and use his own methodology.
Does the business provide training to the worker? If you're hiring a person for a job they are not trained for and providing them with the training to carry it out, that person is probably an employee. There can be exceptions based on the facts and circumstances, but if you fail this test, you might lose no matter how many of the others you pass.
Are the worker’s services a substantial or integral part of the business? This indicates employee status because it indicates the business maintains direction and control over the worker.
Does the business require the worker to perform all services personally? Independent contractors may have their own employees or at least should have the option of hiring other contractors to perform their work. Agreements for personal services indicate employee status.
Does the business hire, supervise and pay the worker’s assistants? If so, this is a strong indication of employee status. Let the independent contractor pay his or her own assistants.
Does the business have an ongoing relationship with the worker? This one is a stretch since many businesses maintain lifelong relationships with contractors whose work they like. But the IRS views this as an indication of employee status.
Does the business set the worker’s schedule and hours? Independent contractors generally set their own work schedules. If the contractor must work certain hours because of required interrelationships with your employees or to take advantage of down time for computer-related work, document these facts.
Does the business require the worker full-time? This is an indication of employee status because the business controls their availability and prevents them from working on other clients.
Does the business provide the workspace? Contractors who work off-site are more likely to be classified an independent contractor.
Does the business determine the order or sequence in which work is completed? Indicates employee status. If specific schedules are required, document them in the contract with the reasoning for doing so.
Does the business require oral or written reports? The IRS believes regular written or oral reports detailing the work completed indicates employee status. In reality, this is, and should be, expected from independent contractors as well.
Does the business pay by the hour, week or month? This indicates employee status. See our comments at the end of this article on this issue.
Does the business pay expenses? This is an indication that the business is directing the Independent contractor's business activities. Make sure the independent contractor pays the expenses and bills you for reimbursement.
Does the business provide tools and equipment for the worker? Independent contractors would normally provide their own tools and equipment.
Does the worker have a significant investment in their own facilities? If the contractor maintains his own office space, computer equipment, tools, etc., this is a good indication that they are an independent contractor.
Does the worker have profits and losses independent of the business? This is an indication that the contractor is running his own bona fide business and is an independent contractor.
Does the worker have multiple clients? Working with multiple clients generally indicates independent contractor status.
Does the worker market their services to the general public? Employees do not generally market their services to the general public.
Does the business have the right to discharge the worker at any time? This suggests employee status. An independent contractor would only be discharged for failure to meet contract specifications.
Does the worker have the right to quit at any time? An independent contractor is under contract and cannot quit until the project is completed.
These are mainly used against the employer but if caught it gets ugly.... I know.
Man I land in the gray area on almost everyone of those points. It will be interesting if my new contractor ever gets audited.
ANDYSZ2I MAY DISAGREE WITH WHAT YOUR SAYING BUT I WILL DEFEND TO THE DEATH YOUR RIGHT TO SAY IT.
Remodeler/Punchout
Geo,
"company benefits are non negotiable. If you have benefits available for anyone including the boss they must be available for all employees. What you do for one you must do for all."
Grey area, as not everyone receives the same benefit package. Seniority does often play a big role in this.
"IRS has clear rules for what is and is not a sub-contractor." The rules are hardly clear IMO, Let's see (as you state them:
Does the business require the worker to follow their instructions on how work is to be performed? In my case, no. If yes, this indicates employee status. An independent contractor will generally decide how the project should be completed and use his own methodology. So under that rule, I'm a sub.
Does the business provide training to the worker? Not lately, for years just show up when asked, and do my job. If you're hiring a person for a job they are not trained for and providing them with the training to carry it out, that person is probably an employee. There can be exceptions based on the facts and circumstances, but if you fail this test, you might lose no matter how many of the others you pass.
Are the worker’s services a substantial or integral part of the business? No, I only work when needed, but this could mean for a 6 month stint, averaging 40 plus hour work weeks. This indicates employee status because it indicates the business maintains direction and control over the worker.
Does the business require the worker to perform all services personally? Yes, Independent contractors may have their own employees or at least should have the option of hiring other contractors to perform their work. Agreements for personal services indicate employee status. Under that rule I'm an employee.
Does the business hire, supervise and pay the worker’s assistants? Yes If so, this is a strong indication of employee status. Let the independent contractor pay his or her own assistants.
Does the business have an ongoing relationship with the worker? 10 years. This one is a stretch since many businesses maintain lifelong relationships with contractors whose work they like. But the IRS views this as an indication of employee status.
Does the business set the worker’s schedule and hours? No. Independent contractors generally set their own work schedules. So here I'm a sub. If the contractor must work certain hours because of required interrelationships with your employees or to take advantage of down time for computer-related work, document these facts. oops, now back to being an employee.
Does the business require the worker full-time? NO This is an indication of employee status because the business controls their availability and prevents them from working on other clients. Geez, now I'm a sub again.
Does the business provide the workspace? Yes, so back to employee Contractors who work off-site are more likely to be classified an independent contractor. But doesn't everyone take work home, at least in their head?
Does the business determine the order or sequence in which work is completed? As in, this is more important to get done than that? Again, grey area. Indicates employee status. If specific schedules are required, document them in the contract with the reasoning for doing so. Employees and subs both have to meet deadlines
Does the business require oral or written reports? No. unless you count my timecard as a written report. The IRS believes regular written or oral reports detailing the work completed indicates employee status. In reality, this is, and should be, expected from independent contractors as well.
Does the business pay by the hour, week or month? This indicates employee status. Hour, so an employee on this one. See our comments at the end of this article on this issue.
Does the business pay expenses? Some, but not all This is an indication that the business is directing the Independent contractor's business activities. Make sure the independent contractor pays the expenses and bills you for reimbursement. Again, grey area.
Does the business provide tools and equipment for the worker? Yes, the vast majority. Independent contractors would normally provide their own tools and equipment. So no, I'm back to being an employee.
Does the worker have a significant investment in their own facilities? No. not in overall proportion, but at least a $30K investment in tools left on site. If the contractor maintains his own office space, computer equipment, tools, etc., this is a good indication that they are an independent contractor.
Does the worker have profits and losses independent of the business? The majority of my income is not earned at my place of employment. This is an indication that the contractor is running his own bona fide business and is an independent contractor. Darn, now I'm a sub again.
Does the worker have multiple clients? define a "client" again, grey area. Working with multiple clients generally indicates independent contractor status.
Does the worker market their services to the general public? No, but define "market" I do, do work "on the side" Employees do not generally market their services to the general public.
Does the business have the right to discharge the worker at any time? YES This suggests employee status. An independent contractor would only be discharged for failure to meet contract specifications. Back to being an employee
Does the worker have the right to quit at any time? An independent contractor is under contract and cannot quit until the project is completed. That's twice in a row!!!!!!!!!!!!!!
Gist of it is, I consider myself an employee, but the rules are far from "CLEAR".
Jon
Edited 5/5/2004 9:48 am ET by WorkshopJon
Benefits are far from being a grey area. What is offered to one must be offered to all. Offering an applicant a benefit as enticement for employment not offered to existing employees is not only bad form, it's illegal. Now granted there are a million ways around it and it must be handled correctly...but it's still bad form.
As for all the answers to the IRS questions, it is to determine if you are a subcontractor. If you answered more then 2 as being an employee...guess what? You probably should be considered an employee.
"As for all the answers to the IRS questions, it is to determine if you are a subcontractor. If you answered more then 2 as being an employee...guess what? You probably should be considered an employee."
Why you didn't state that when you posted the "guidelines"?
"Benefits are far from being a grey area. What is offered to one must be offered to all."
So why do executives who work for big companies get so many more benefits than the lower ranked ones? If what you say is true, that "there are a million ways around it" then in fact there are grey areas........and could it be that their contracts are negotiated on an individual basis, where as the lower ranked people are offered a take it or leave it, this is what we give package?
Jon
First question is when guidelines are given with the heading:
" IRS has clear rules for what is and is not a sub-contractor"
Do you have a comprehension problem?
Second question is please direct me to the conversation in this thread of executive employment benefits with a big company? I think you may be talking perks and not benefits. There is a big difference and if you offer employees benefits,or message board users advice, I'd suggest you research it.
"First question is when guidelines are given with the heading:
" IRS has clear rules for what is and is not a sub-contractor"
Do you have a comprehension problem?"
GEO,
Are you for real? Do I have a comprehension problem?
Stating two dozen guidelines, and not stating where one has crossed the line? 1, 2, 10?
I have much respect for Jerrald Hayes for his trying to keep this thread an educational discourse, and an equal, if not greater destain for you to try to turn it into a flaming session, as happens all to often, AND HAVE IN FACT DONE.
"please direct me to the conversation in this thread of executive employment benefits with a big company? I think you may be talking perks and not benefits."
To once again quote you, "there are a million ways around it"
Call them what you want, In the real world, benefits are not handed out equally and evenly, despite what laws say or otherwise, and if you think that I'm wrong, YOU ARE THE ONE that needs to do the research. Lot's of legal and quasi-legal ways to slip stuff under the screen.
Do I need to give you example after example? given how smart you imply you are?
Jon
Edited 5/6/2004 7:18 pm ET by WorkshopJon
Actually you are right it was stated as what is and isn't a sub-contractor.
When you can't answer them all as being a sub...you are an employee. But IRS, not me, gives you alittle leeway.
As for benefits riddle me this.
You hire 2 employees on the same day, both make $50,000 per year. Company policy is after 1 calander year each employee is entitled to 1 weeks paid vacation. One is hourly and the other is salary. You also have a company HMO medical plan but the company offers a fully paid blue cross plan with no deductible to the salaried employee as am enticement for employment but to no one else. Now the kicker....the salaried employee gets his job done by only working 3 days a month.
Tell the class what is a benefit and what is a perk and what is illegal.
Rules and regulations for benefits are very clear with no grey areas. Cite any example you wish and I'll gaurentee you there is a clear legal answer.
Dude... I've hired and fired more employees then poster registered at Breaktime, and been sued for more stuff then you could imagine. I have learned the hard way how to get around those grey areas because when it goes before a judge, they don't see grey.
"Company policy is after 1 calander year each employee is entitled to 1 weeks paid vacation. One is hourly and the other is salary. You also have a company HMO medical plan but the company offers a fully paid blue cross plan with no deductible to the salaried employee as am enticement for employment but to no one else. Now the kicker....the salaried employee gets his job done by only working 3 days a month.
Tell the class what is a benefit and what is a perk and what is illegal."
GEO,
That one is pretty blatant, but still often can go unnoticed until an audit. Pretty common in mom and pop small businesses so that a barely working family member can get something out of a business.
What I was getting at with respect to perks vs. benefits, and you tell me......not talking legally, just reality, what they are. These are all normally fully expensed deductions.
Hypothetically company provided:
cell phone with unlimited minutes.
portable laptop computer
clothes cleaning and pressing
clothing "allowance"
lunch, and even breakfast and dinner everyday
company provided car
use of the company plane, and your family gets to tag along on business trips for "conferences" that are always in tropical locals in the winter.
Yeah, if they are needed for "conducting business" they are deductible as "expenses"
In reality, they are benefits that only top management gets.
Jon
Edited 5/7/2004 8:48 am ET by WorkshopJon
If I remembered correctly I looked for this list on the IRS site and one time and they now longer list it.
But be that as it may, I did a google on -irs guidelines on employee subcontractor-.
Of the first handful that has the list of question they had these comments.
"As you can see, there is a high degree of subjectivity in these tests. Some consultants will tell you that you're in danger if your worker falls into the employee category on more than 7 to 9 of these guidelines. I can tell you from experience that you may be in trouble if you fail on only three or four! The test is highly subjective and an IRS agent may feel strongly that the requisite control is evidenced even if you pass most of the guidelines with flying colors."
"What all these factors try to determine is whether or not an employer has the right to control what a worker does, and how and when he or she does it, as well as how much financial risk the worker has taken on for themselves or how much investment they've made in their own business. The more control a business has over a worker, the more likely the worker should be classified as an employee. The more financial risk the worker has in terms of business profit and loss, or the greater their own investment in tools, equipment and facilities, the more likely they are to be classified as an independent contractor. If a person falls into the employee status on more than 8-9 of the IRS guidelines, you should probably play it safe and make them an employee."
"The federal Internal Revenue Service provides 20 guidelines in its Publication 937 and its Form SS-8 for determining whether a service provider is an employee or an independent contractor, but even the IRS itself says that its interpretation of these guidelines is subjective and depends on the specific circumstances. Furthermore, the IRS does not necessarily require that all 20 criteria be met: that determination is also subjective, though some sources say that satisfying any 10 of the criteria is sufficient. Here are the 20 guidelines, with the language the IRS uses for its determination in quotes, and the status of Wright Consulting Services, Inc. (WCS) described after each:"
"State and various agencies use several tests to establish the existence of an employer/employee relationship. The most common, although not as comprehensive, is the 20 Factor or Common Law test. The result of the test will determine the existence (or lack of) the right to control the worker. The mere right to control a worker is critical. The right to control is often found to exist through examining various characteristics of the relationship, and inferring that it is present whether or not it is executed. Here lies the source of most of the uncertainty surrounding the issue of control. To date, the IRS has refused to issue definitive guidelines or a clear cut weighting system for evaluating the various factors. For this reason, it is important that the evaluation of independent contractor relationships is performed by experts who can examine circumstances beyond the 20 Factors Test."
"Exactly what does and does not constitute a consultant agreement can be extremely tricky to determine. In general, an independent contractor should work with minimal direction, at his own time, and in his own way. The more you direct or lay constraints and restrictions on an individual, the less likely that individual is to be judged a consultant rather than an employee. Research Foundation IRS Twenty Factors of the Common Law Test, Independent Contractor vs. Employee, is used to help you to determine if what you are proposing is a consultancy. If you have to answer "no" to more than one or two of these questions, then the individual you plan to hire most likely belongs on the Research Foundation payroll and should not be hired as a consultant."
As you can see they are hard clear and simple tests.
"I'm not talking about the differences between single male vs childbearing age female vs family programs which is what I used the phrase "dollar for dollar". Dollar for dollar the value buying power in a group is greater than in an individual"
Jerald,
On that you are correct. What I was getting at, and just like car insurance, and DESPITE all the talk we here, a healthy male between 21 and 40 can in fact purchase health insurance significantly cheaper on their own compared to what is typically offered in a group plan through work. Will it be an identical policy? Of course not, but I still maintain the breakeven is only a few months.
To use my car insurance example as an analogy, If it were purchased as a group plan, like lots of health ins., a 16 year old driving a new Corvette would pay exactly the same rate as a 30 year old mom driving a minivan. In the real world this is not how car insurance is sold, but it would be, if similar laws that apply to workplace insurance applied in that scenario.
Healthy young males heavily subsidize the primary users of the system, that being women, children and older folks. The premiums on policies purchased outside the workplace, where those laws don't apply, reflect that fact. Raising ones deductible to something around $1000 to $2000 is still chump change compared the the figure you quoted that in the trades, the average health ins. premiums are $505/month. Going the route I suggest will get you, at least in WI, a premium of ~ $100/month. (four years ago I was paying ~$60/month)
As for:
"there is no way that I can see where you could possibly be making 30% more out of a deal like that. No way!"
According to the US Department of Commerce, benefits account for, on average 42% of labor cost in the US. Now that statistic in and of itself means little since workers benefits run the gambit. But yes I did in fact trade all my benefits off for a 30% pay increase. The deal was more complicated than just a simple trade, as are most LT negotiated contracts. But both my employer and me came out ahead.
Jon
Jon, there are two ways that employers provide health insurance as a benefit (and it's my understanding that the rules on this can vary state to state).
1. Employer agrees to make a contribution of XX amount of dollars to the health insurance of an employee
2. Employer agrees to provide health insurance to the employee
In case 1 lets say the employer agrees to pay $300 per month for the health insurance benefit . According to the company's health insurance provider coverage for a single male costs $325 per month and coverage for a married individual runs $800 per month. The single male employee would have $25 deducted from his monthly pay check to pay (pre-tax) for his portion of the insurance. The married individual would have $500 deducted from his monthly pay check to pay (pre-tax) for his portion of the insurance. The healthy young male in that system is NOT heavily subsidizing the primary users of the system.
In case 2 however the case would be different and the healthy young male in that system is WOULD BE subsidizing the higher cost individual using the system. In a large company of 100 or more employees that inequity tends to get lost in the haze of it all however for the small company of lets say 3-7 employees that inequity becomes more obvious and dramatic.
It all depends on how the owner/employer decides to structure how they want to pay for the health insurance benefit to their employees. It's a case of six of one half dozen of the other here. Either way, either case, someone, either the single male or the married employee loses while another one gains.
Regardless of which case a employer chooses that $300 or whatever the employer pays in the way of health insurance it buys more or better insurance than the same $300 spent on a insurance by an individual. And the employer is getting the tax break for the money spent providing health insurance for the employees and the other advantages I mentioned that go along with the lower actual payroll costs.
re: "The deal was more complicated than just a simple trade, as are most LT negotiated contracts. But both my employer and me came out ahead."
Nah, your employer only thinks that they came out ahead. As I mentioned they are paying more in workers comp and they are not getting any of the tax credits that they would get if they were paying for the insurance. And the point that I have been trying to make is the employee loses in that their buying power for purchasing health insurance on there own is diminished in that is first reduced by payroll taxes on the wage increase and the fact that insurance purchased as an individual costs more dollar for dollar than it would if purchased as part of a group.
Your arrangement might be more complicated than what we are talking about here but in the simple terms that I'm talking about here it's certainly not a win-win. I think that an arrangement like you employer has chosen is half-way out there in the gray area in between having employees and subbing out all the work. Contractors who fire all their employees and hire them back as employees do it telling them that they "will make more money that way" when the real reality is it is at the very best it's only going to be a wash and in the vast majority of cases the trade worker loses and fairly often the contractor loses too.
Just out of curiosity what is your employers policy regarding working overtime? I mean I know it's a federal law that employers are required to pay time and a half for work over 40 hrs (and I know California has laws regarding OT that deal with how many hours in a day you can work) but do your employers allow you to work overtime or do they prohibit it because they think it too expensive?
And P.S. another question. Regarding the the Department of Labor data you mentioned can you point me to where you got that if it's on the net. I collecting information regarding those kinds of things for something I am working on. Unfortunately there is a real dearth of information regarding setting up benefits programs for contractors in all the books out there written on running a contractor business. While I'm really pretty sure they include Social Security and Unemployment Insurance in that 42% I'm wondering if they also include Workers Comp as an employee benefit too. I know in Texas employers can opt out of providing WC for there employees (which I think is just terrible for the employee) so down there WC would certainly be seen as a benefit so I'm intersted in finding out how that study defined a benefit.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
Jerrald,
I commend you for not turning this back and forth into a flame, and actually thinking about what you are typing. Based on the sheer length and content of that post......gotta' say, yes, you know what you are talking about, but at the same time, for my specific situation, I think you are agreeing with me.
Out of respect, and again avoiding a flame, I'm choosing not to do a cut/paste and address each and every comment I can.
A little background. I do not work formally in the construction trades. I work for a very small (13 employees) company that focuses on building mostly one-off products for the military, aerospace, and scientific research (mostly major universities) organizations. I do CAD modeling, CNC programing and set-up, designing/engineering, and a host of other non administrative related tasks.
The work pays well, but is very sporadic due to the nature of how government budgets work, and how contracts are awarded. In order to keep high caliber talent, my employer chooses to give very good benefits, and find ways to "keep the employees busy" when things are slow. For 2/3's of the workers, this works out, as you point out that they can purchase many things given as benefits (via tax incentives and purchasing power) cheaper than one can as an individual.
As Bill Hartmann also points out, a benefit provided to someone who places no value on it, even though it was purchased at a discount, is simply money wasted. As an example, as a single male with no dependants, no dept of any kind, and enough saved up that they could retire at anytime .............why is life insurance a "benefit"? Definitely to the early 20's apprentice, who has a wife and two kids, yes, but otherwise, money wasted. It certainly is a cost to the employer however. I can go on, but I'm sure you see my point.
Additionally, there are also "benefits" that in fact, not at all. Paid holidays and vacation for example. What does the employee or employer really get in return? Yes one could argue it builds loyalty, but..............not the right kind IMO.
Now that I'm married (and this was always part of my plan) DW company picks up my healthcare. My employer's policy is to pick up 100% of the cost, and factor that into a workers's wage rate. Needless to say, a 3 year apprentice on "the total family plan" and 3 weeks of vacation takes the majority of their "pay" as a benefit (trust me on this one). Because so many people I work with are in fact married with kids, and because it is a small company (13) it is cheaper for the them to go the group route on nearly everything. A "cafeteria style" plan would be too costly to administer.
As for your question about overtime, we have no formal policy. Some people, mostly the younger ones, work 70 hrs/week, people like me average 1500hrs/year, of which I'd guesstimate 100 as OT. It is time and a half or double time. We are expected to work extra to meet a deadline. (I average about 8 months/year formally working) The rest is balanced working on and around my house (building equity) , and other forms of work that are legally tax free. (keeps my top marginal rate low).
Oh and....
"Regarding the the Department of Labor data you mentioned can you point me to where you got that if it's on the net."
Probably it is. Tons of articles siting the study, but after many Google refined iterations, I couldn't find the actual study.
Jon
Jon-"I commend you for not turning this back and forth into a flame, and actually thinking about what you are typing." Thanks Jon I'm certainly not trying to flame anyone or anybody but that could be misconstrued in the heat of any kind of spirited debate and I am a man of my convictions. Certainly more often than not I like to think there is a lot of thought going into what I write online. I participate in online forums to explore and learn stuff and not particularly for the social interaction which so many other people find important.
"A little background. I do not work formally in the construction trades. I work for a very small (13 employees) company that focuses on building mostly one-off products for the military, aerospace, and scientific research (mostly major universities) organizations. I do CAD modeling, CNC programing and set-up, designing/engineering, and a host of other non administrative related tasks."
That's sort of ironic in a way Jon in that I do productivity (TOC, drum-buffer-rope and lean) and general business consulting for a small electron beam welding aerospace job shop the same size as yours. With them while there are some really short runs as well as samples and prototypes that they have to produce at times some of the contracts they get are to produce x amount of a certain components on specific schedules for years!
"As Bill Hartmann also points out, a benefit provided to someone who places no value on it, even though it was purchased at a discount, is simply money wasted. "
On that count I am in total agreement but that's another thing I sort of put that into the category of you can't please everybody all of the time.
"...As an example, as a single male with no dependants, no dept of any kind, and enough saved up that they could retire at anytime .............why is life insurance a "benefit"?"
Well a life insurance policy accumulates a cash value as the years go by so it's something that the employee can use to borrowed against for one thing. To see how it can work from an employers perspective check out Golden Handcuffs:
Could Handcuffs Be A Benefit? And besides most people, certainly the vast majority eventually do get married and have kids so life insurance is eventually of some real value to them. (Present company maybe excluded. I'm 47 and single never been married. Confucius say he who never gets married never make same mistake twice).
Then again it occurs to me too that when I was 25 I certainly didn't want health, life insurance, or retirement benefits. I would have wanted the more cash for beer, a motorcycle, and more skiing. I look back on that differently now and wish I had though differently or that I had had an employer who knew better than me force feed me those kinds of things.
"Additionally, there are also "benefits" that in fact, not at all. Paid holidays and vacation for example. What does the employee or employer really get in return? Yes one could argue it builds loyalty, but..............not the right kind IMO."
Oh I don't know about that. Usually paid holidays and then paid vacation is the first kind of real benefit that employee will see from an employer and my people and the people I know in other companies that give that to their employees certainly appreciate it. The employer doesn't get any real tax breaks on something like that but it sure pays off in helping to build esprit de corps. And one of the good things about it is it's kind of a bonus that pays out every once in a while throughout the year. Not doing it can label you as tight wad cheapskate which can lead to all sorts of employee type problems. As I mentioned earlier in post #41053.40 of the A PROOF Style Markup Excel Worksheet topic Hiker said:
So with proper financial planning it doesn't take much on the part of the employer to provide something like that.
I asked about overtime because many employers prohibit there employees from working any overtime because they feel the time and a half OT pay cost them more when in most cases once again it really doesn't but that another topic altogether I've been planning on bringing up here. Maybe next week I'll get to it.
As for the Department of Labor study I did some googling around myself and found tons of interesting stuff to look over so even if I don't find the exact answer to my question I have lots of other material now I can use. It's at least exposed me to a googling direction I hadn't considered before.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
"Well a life insurance policy accumulates a cash value as the years go by so it's something that the employee can use to borrowed against for one thing."
No, only whole life insurance does.
All the insurance that I am seen from my, very limited, experience as an employee has been strickly term insurance.
Well you are correct I wasn't specific enough in my wording. Mea culpa, ah semantics. But I think YOU knew just what I meant.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
"Usually paid holidays and then paid vacation is the first kind of real benefit that employee will see from an employer and my people and the people I know in other companies that give that to their employees certainly appreciate it. The employer doesn't get any real tax breaks on something like that but it sure pays off in helping to build esprit de corps."
Jerry,
Yes and no IMO. The amount of "paid" time off has become so standardized across trades and professions, that it has lost it's motivational value. ie, employees expect it, and it's become another administrative burden. Just like the Christmas (holiday time) "bonus". that is the same plus a tad more, year after year.
Granted, some don't see stuff like that for what is in fact is. And do "appreciate" it when it comes, but on the other hand, not getting a regular bonus, cause "times are tight" is demotivating.
And..."As for the Department of Labor study",
It was a Department of Commerce study, not Dept. of Labor, I referred to.
Jon
Jon-"It was a Department of Commerce study, not Dept. of Labor, I referred to."
Mea culp, I mispoke again. I literally copied and pasted what you wrote back then right into Google to search so I did do my initial search looking for "Department of Commerce" & "employee benefits" but I also then searched some more and found a Department of Labor Document called Employee Benefits in Private Industry, 2003 (a PDF) that I just started reading this morning when I broke for coffee. Way sometimes leads on to way. I've actually have a whole bunch of DOC & DOL stuff to read up on now.
View Image
ParadigmProjects.com | Paradigm-360.com | Mac4Construction.com
Jon,
I have been keeping up with this thread and I will have to disagree with you on two points.
First, I recently started a new job, and for the first time ever I will get paid holidays. Maybe I wasn't working for the right companies before, but in my experience most smaller companies (<5 field workers), even if they are stellar, don't offer paid time off. Could be a regional thing, or maybe I just run in the wrong circles.
Secondly, I would prefer a job that is heavy on benefits rather than pay. Your discussion of health ins. is debatable, as you know that you don't need it as much as the guy with a stay at home wife and 5 kids. But when it comes to other benefits, I think it's in the employers and the employees best interest to pile them on.
For instance, the company that I just started with gives a $20/week "gas reimbursement". With the price of gas $20 doesn't go far, let alone the real cost of a vehicle is probably 2-5x the cost of fuel. Why don't they give a $50 allowance? I don't think it would be a problem in an audit, as they could prove that most jobs require a round trip of 30+ miles. Same with tools. Currently we get nothing for the use of our own tools. Why not give every employee $2k a year, and knock $1/hr. off the wage.
The company doesn't have to pay comp. and other premiums on this type of compensation and the employee gets the $$ tax free. Obviously there is a limit ($10,000 tool allowance might be a stretch) but I think across the board, employers do not take advantage of this type of program.
Jon Blakemore
"First, I recently started a new job, and for the first time ever I will get paid holidays. Maybe I wasn't working for the right companies before, but in my experience most smaller companies (<5 field workers), even if they are stellar, don't offer paid time off. Could be a regional thing, or maybe I just run in the wrong circles."
Vacation Pay and Holiday pay are not benifits. They are just defered compensation.
"Vacation Pay and Holiday pay are not benifits. They are just defered compensation."
Bill,
THANKYOU
Jon
Is this going to be a semantical discussion?
Deferred compensation, benefits, perks...
Ultimately they put money in my pocket.
When I work 4 days a week and get paid for 5 (it was a holiday) I consider that to be a benefit. Maybe I'm conditioned by my lack of employers who paid for time off, but I think that anything above "X $'s for X hours worked" to be a benefit.
Can you explain how, in the grand scheme of things, paid time off is different than health insurance? They both add value, either through more money or fewer costs.
Jon Blakemore
"Can you explain how, in the grand scheme of things, paid time off is different than health insurance? They both add value, either through more money or fewer costs."
Easily:
Paid time off = you work so many days a year, and have that amount deducted from your paycheck of said amount equal to your paid days off over the course of a year, amortized over that period. then are given it back during the period you take vacation and/or have holidays and time off. There are not any tax advantages or group purchasing power advantages there.
Very similar to how people think that the IRS gives them money when they get a refund, when in fact it's money you gave up, only to get it back later.
Other benefits can, but may not always add value. Again my [term] life insurance example for a single person with no dependants.
If you have dependants yes, it adds value, if none, how do you benefit? Yes, you could leave the payout to a non-dependant, but why would one ordinarily buy [life] insurance for that reason, and IMO, wouldn't you benefit more from having a bigger paycheck?
Jon
Edited 5/6/2004 7:22 pm ET by WorkshopJon
After this post my piece will have been said.
I think the reason I took issue with your post is I interpreted you to be saying that paid time off is an across the board situation. As I proved, it is not. I agree with your explanation, although I think most would not follow (i.e. the refund "elation").
Above all I think we both agree that one must consider the compensation package, not just the hourly rate/salary. If I understand you correctly, a "benefit" is a means to increase value through group purchasing power, tax benefits, comp premium reduction, etc., then I can live with that.
Ultimately I'm interested in how much value I receive, whether it be wages, salary, benefits, or deferred compensation. I'm sure all who think critically would agree.
Jon Blakemore
"Ultimately I'm interested in how much value I receive, whether it be wages, salary, benefits, or deferred compensation. I'm sure all who think critically would agree."
Jon,
Yes I would,......I was simply pointing out that sometimes a benefit package offered doesn't add to certain individuals the value they derive from opting out of it, if it has been tailored to a different type employee. IMO, sometimes better to take cash up front.
Jon
So, if you don't mind us asking...how did it turn out?
Whenever you are asked if you can do a job, tell'em "Certainly, I can!" Then get busy and find out how to do it. T. Roosevelt
I took the job they pay me a weekly fee plus 25$ an hour for any work I do that we bill to the jobs plus a percentage of the profits at the end of each job.That percentage is to be decided after a couple of jobs.
They have not been making near what I expect per job but I am instilling in them that we bid to make 35% of the job costs to cover overhead and profit in the remodel side of the company.
They have a great set of subs and more work than we can handle and are interviewing for an office manager.
I personnally like these guys attitude and drive so I think the position is going to work out well.
ANDYSZ2I MAY DISAGREE WITH WHAT YOUR SAYING BUT I WILL DEFEND TO THE DEATH YOUR RIGHT TO SAY IT.
Remodeler/Punchout
Andy,
Good to hear it sounds like its working out for you. Let us know what happens at your first "review."
Jon
Health insurance, due to the fact that the books are rigged by the government can have a tax benifit.
But vacation and holiday pay do not.
"When I work 4 days a week and get paid for 5 (it was a holiday) I consider that to be a benefit. Maybe I'm conditioned by my lack of employers who paid for time off, but I think that anything above "X $'s for X hours worked" to be a benefit."
What if you worked the 4 days and got paid x+25% for the 4 days and nothing for the 5th day?
An employeer has so much that they can pay for a position. they can pay it all salary or they can REDUCE it and pay part of it out as "benifits".
I will have to disagree with you on two points......
1) See Bill's comment. Can't be said any simpler.
2)I would prefer a job that is heavy on benefits rather than pay. Your discussion of health ins. is debatable,
Never once during this thead have I said that I was against employers loading on the benefits. The person whom started this thread was wondering if he should exchange health ins. for more pay, given it's picked up on his wifes policy. I shared my experience.
What I have stated is that despite there being tax advantages and economies of scale to a companies providing them, what an employer offers, dosn't nessasarily fit with an individuals needs.
In my case, the "package" they provided was taylored to married workers with kids, who live close to month to month, and and value a steady paycheck. I don't.
Now when I gave up benefits, I was able to purchase health insurace for $60/month myself vs. the $330 the company had to pay via their group plan. One doesn't have to plug the #'s into a spread sheet to see that arguing that paying post vs. pre tax dollars might change the equation enough, and make me not come out ahead. Plus, now I'm picked up under my wife's plan anyway, which is way better.
Benefits are generally amotized over some predetermined period. The ramifications of which are, if an employee works less than the minimum planned, even if (especialy if?) paid hourly, their combined wage goes up, since their benifits remain constant. Thus there is pressure for an employer to keep the employee working at all times, so their wages remain constant. I relieved my employer of that burden, and also allowed for an overall reduction in company overtime.
Working without any benefits is not for everyone, but is for some if it means substantially greater pay rates, and fewer and more flexible hours.
Jon
Edited 5/6/2004 11:19 am ET by WorkshopJon
Edited 5/6/2004 11:22 am ET by WorkshopJon
If you are being paid hourly, and the workscope is "how ever many hours it takes," you are an employee.
What is the Workers Compensation situation here?