Paying for Road Time??

[techlabco]

I am located in the Valley in Los Angeles. Fortunately, in these hard times, we are starting to do well. I have 5 guys working for my company. Here is my question to you guys in relation to pay.
My company is mainly a Mobile Computer Networking and Repair Company. My guys have to drive to wherever the client location is. Now, I have read about different methods of paying for travel-time, etc. and I pay them for the mileage they drive (.38 per) and start their hourly pay when they arrive and leave the clients home or business.
I haven't had any issues with it until yesterday. Hired a new guy, took him on some jobs with me but we were on the road most of the day due to the HORRID traffic of the 405. Now, I know part of this is my fault but I should have been specific with him as to how he was gonna get paid. I always am but I hired him quickly and got him on with me so we could take on a couple big company jobs.
He wanted to get paid hourly for being in traffic. I was gonna pay him for all the mileage but I didn't wanna make him feel I was shorting him. So, I paid him for 8 hours with 4.5 being in traffic.
Is this something that you would do? I mean, I don't charge clients for time I am in traffic but I know I have to take care of my guys but that is why I give them so much a mile. But a full hourly rate while in traffic? I don't think my clients could afford us if we adjusted to reflect!
Thoughts?
I am trying to improve as a small business owner and I am not a cheapskate...just want to do the right thing here. I have called other businesses and they do the same.
Or did I get a guy who was being unreasonable?
Haven't had any issues till now!
Thanks in advance for your thoughts and views.

 

[vdub12]

I don't see anything wrong with the way your doing it.

If the new guy does not like it all I can say is the economy is not that good right now and there are a lot of starving techs. He would not be hard to replace.

 

[ATTech]

I don't see anything wrong with the way your doing it.

If the new guy does not like it all I can say is the economy is not that good right now and there are a lot of starving techs. He would not be hard to replace.

Great way to look at it: Hey, I can treat my employees like crap. If they don't like it, tough, there are plenty of other techs who will take the abuse.

@OP
Without more specifics it's difficult to say. If it takes them 4.5 hours to drive a 25 mile round trip, then they effectively getting paid $2 an hour. But if it was a 200 mile round trip, then it's obviously different.

Paying mileage should account for the time spent traveling for at least a reasonably discounted rate. In situations where you ending up paying a small effective rate because of traffic, I would say take a look at the effective pay rate and pay them enough to make it a reasonable rate.

In places where traffic is a common, such as LA, your rates should account for the time that you spend in traffic. That's not something that the business, nor the employees should have to eat; it's something that the client should to expect to have to pay for when they request on-site service. I'm certainly not suggesting that you pay your employees a premium for sitting in traffic, nor am I saying to include a traffic charge on the client invoice, but your customer should be footing the bill for the premium for not having to sit in traffic themselves.

 

[vdub12]

Great way to look at it: Hey, I can treat my employees like crap. If they don't like it, tough, there are plenty of other techs who will take the abuse.

@OP
Without more specifics it's difficult to say. If it takes them 4.5 hours to drive a 25 mile round trip, then they effectively getting paid $2 an hour. But if it was a 200 mile round trip, then it's obviously different.

Paying mileage should account for the time spent traveling for at least a reasonably discounted rate. In situations where you ending up paying a small effective rate because of traffic, I would say take a look at the effective pay rate and pay them enough to make it a reasonable rate.

In places where traffic is a common, such as LA, your rates should account for the time that you spend in traffic. That's not something that the business, nor the employees should have to eat; it's something that the client should to expect to have to pay for when they request on-site service. I'm certainly not suggesting that you pay your employees a premium for sitting in traffic, nor am I saying to include a traffic charge on the client invoice, but your customer should be footing the bill for the premium for not having to sit in traffic themselves.

If it takes 4 hours round trip to get to a job you can't expect the client to pay 5 hours for a 1 hour job.

I am not saying treat the techs like crap but how is the OP suppose to make a living if he pays the techs to sit in traffic. The only way to deal with this and still make a profit is to pay the techs minimum wage and we all know thats not going to happen.

Maybe an alternative would be minimum wage while waiting in traffic. Or if you can average your work then put the employees on salary.

My point is if the other employees don't have a problem with it but this new guy does then maybe he does not fit right in the business and replacing him is not going to be a hard feat.

 

[ATTech]

If it takes 4 hours round trip to get to a job you can't expect the client to pay 5 hours for a 1 hour job.

As I said, there is no reason to bill it on the invoice like that, but the rates that he charges should account for traffic time.

I am not saying treat the techs like crap but how is the OP suppose to make a living if he pays the techs to sit in traffic.

How are the techs supposed to make a living getting paid $2 an hour to site in traffic for half the day?

Maybe an alternative would be minimum wage while waiting in traffic.

Sounds like a fair compromise. As I said, I don't think that he should be paying them their regular rate, but minimum wage sounds like a decent way to do it.

My point is if the other employees don't have a problem with it but this new guy does then maybe he does not fit right in the business and replacing him is not going to be a hard feat.

I took it to mean that this is the only time that the traffic has been so bad where this has become an issue. Without the details of the miles traveled and the rate payed, it's impossible to give a good response to this situation. It's certainly possible that the traffic meant that he got paid a few bucks less an hour and the employee was unreasonable, and I would agree with 86ing the tech, but I've been stuck in LA traffic and know that $.38 a mile isn't much, even for up here, so based on that, I would be inclined to side with the employee.

 

[Peaceful]

Are these guys hourly employees or independent contractors? If hourly workers I believe there's labor laws that come into play here is there not?

 

[mraikes]

The OP hasn't specified whether he provides company vehicles for his techs use (although the example with the new guy indicates he was a ride-along), but usually "mileage" payments are to compensate for the actual and immediate expense of gas, plus insurance and maintenance/vehicle wear and tear. It's not typically a compensation for time spent - and certainly not at 38 cents.

Everyone needs to earn a certain average per hour to pay the bills and have a basic standard of living. A mileage rate, rather than an hourly rate does little to achieve that standard.

A tech driving a short distance in slow traffic gets cheated compared to the tech driving a long distance at high speed. Which one will get paid more for the exact same amount of time away from the office? That doesn't seem right.

Certainly an unforeseeable traffic jam isn't exactly the owner's fault, but if it's truly a rare occurrence (in LA?!), it's a risk appropriately assumed by the business, rather than the tech. After all, the tech doesn't set the rate, the schedule, or the service area. A responsible employer does assume a certain exposure and risk on behalf of his or her employees. If it is too burdensome (too many traffic jams?) perhaps the average customer charge needs to be increased.

 

[Appleby]

This is an interesting situation and one I don't have the answer for but I find intriguing.

I don't know what hourly rate you pay your guys while they are actually working but it sounds to me like, they are spending at least 50% of the day in traffic. So whatever rate you pay them while working, can actually be divided in 2, once they figure their actual pay for actual hours "at work".

Again, I don't know what you are paying them hourly but it seems like it's got to be ALOT since they are only really getting paid for 50% of their work day.

I have no idea what the answer is to this problem since I work in a small town of 25-30K and there is no traffic whatsoever. I understand that if you paid them their full hourly wage the whole day, you'd go broke...but maybe this business model won't work in a big city unless you have people willing to work for beans? I just don't know. How long have your other guys been working for you? Have they ever had any complaints about only getting paid for part of their work day?

 

[vdub12]

This is an interesting situation and one I don't have the answer for but I find intriguing.

I don't know what hourly rate you pay your guys while they are actually working but it sounds to me like, they are spending at least 50% of the day in traffic. So whatever rate you pay them while working, can actually be divided in 2, once they figure their actual pay for actual hours "at work".

Again, I don't know what you are paying them hourly but it seems like it's got to be ALOT since they are only really getting paid for 50% of their work day.

I have no idea what the answer is to this problem since I work in a small town of 25-30K and there is no traffic whatsoever. I understand that if you paid them their full hourly wage the whole day, you'd go broke...but maybe this business model won't work in a big city unless you have people willing to work for beans? I just don't know. How long have your other guys been working for you? Have they ever had any complaints about only getting paid for part of their work day?

I'm in a rural area myself and I am also just starting out so I imagine things will get better as time goes one but I spend at least 50% of my time in my truck and there is hardly no traffic here at all but I also server two separate counties so distance between jobs can sometimes be a problem.

 

[Peaceful]

We can all sit here and play jailhouse lawyer, but the op here really needs to check with his local/state labor board. Pretty sure there's hardfast laws dealing with issues such as this.

Now that I think about it, I used to work for a company in a similar capacity and we weren't even allowed to do dashboard lunches on the way to a job because we were still considered on the clock when in transit.

 

[Cybjun]

Not being a expert myself I think it brakes down to is he an employee or contractor. If hes an employee did he have report to a store/office first or was this his first or second appointment of the day. For an employee hourly pay begins from the moment he starts work and doesnt just stop because his in his car between jobs. You dont have to pay for drive time to get to the first appointment if he was required to start that day at the first appointment but as soon as that job begins the timeclock starts. Contractors it just depends on the terms you agreed too.

 

[techlabco]

Wow, thanks for all the input. To answer a few questions....
yes, they are my employees.
We do not have a store as my business model revolves around us scheduling appointments and telling the tech where to go.
You can't really sub them out and let them wear company branded shirts, etc because it is misrepresentation.
I have not officially checked with a lawyer about this but I am planning on it very soon. I need to know.
And no, I have never had any complaints about travel time from my other guys.

I remember when I had a moving job. When I arrived at store, I was on clock even during travel time but that was different as we had alot of responsibility while transit.
Telling you that to tell you this, if my guys arrive at a job at 11am and it takes them 1 hour. The next appt is at 2 pm. I shouldn't have to pay for my employee to do whatever in-between.

We are about to open a store soon and I think I can regulate this easier as we would have a "home-base".
I don't know.....
I just wanna be a good boss and business owner and it can be really hard when the economy is on all wheels. We are doing well but it is still difficult because when you need to expand or find out things like this, you gotta shell up a pretty penny. But I guess a pretty penny goes a long way in preventing Uncle Sam from glaring at you.
I am gonna go find out and will let you guys know what I find out!
Thanks and stay tuned...I will be reading comments!

BTW....if there is anyone in the LA area that wants sub-out or a job...hit me up...we are hiring

 

[techlabco]

This is from the Department of Labor website.

http://www.dol.gov/dol/topic/workhours/traveltime.htm

Time spent traveling during normal work hours is considered compensable work time. Time spent in home-to-work travel by an employee in an employer-provided vehicle, or in activities performed by an employee that are incidental to the use of the vehicle for commuting, generally is not "hours worked" and, therefore, does not have to be paid. This provision applies only if the travel is within the normal commuting area for the employer's business and the use of the vehicle is subject to an agreement between the employer and the employee or the employee's representative.

so, I guess that means I need to talk to a labor attorney because they are using their own vehicles. Or I could invest in some vehicles. hmmmmmmm.....

 

[ATTech]

Just keep in mind that the most successful companies don't pinch pennies when it comes to their employees.

 

[Rodrick]

This is from the Department of Labor website.

http://www.dol.gov/dol/topic/workhours/traveltime.htm



so, I guess that means I need to talk to a labor attorney because they are using their own vehicles. Or I could invest in some vehicles. hmmmmmmm.....

Doesn't matter whose vehicle, if they are driving because of the job (ie not to first job or from last job, but in between jobs) they are on the clock. Really should see a lawyer because you just may be on the hook for lots of back wages if your current employees sue.

In my state they cannot sue until they get fired or quit but afterwards, any time due for however many years they worked the labor board will collect even if it causes the business to go under. Not something to mess around with or take the advice from Internet armchair lawyers.

 

[JustMe]

Do you have an accountant? If not, get one fast and have him look how your business is set up. You are probably on the hook for back wages for your employees

Telling you that to tell you this, if my guys arrive at a job at 11am and it takes them 1 hour. The next appt is at 2 pm. I shouldn't have to pay for my employee to do whatever in-between.

Sorry to say but you probably will have to pay. Best to check with your accountant.

US Department of Labor - Wage and Hour Division

Waiting Time: Whether waiting time is hours worked under the Act depends upon the particular circumstances. Generally, the facts may show that the employee was engaged to wait (which is work time) or the facts may show that the employee was waiting to be engaged (which is not work time). For example, a secretary who reads a book while waiting for dictation or a fireman who plays checkers while waiting for an alarm is working during such periods of inactivity. These employees have been "engaged to wait."

Travel That is All in a Day's Work: Time spent by an employee in travel as part of their principal activity, such as travel from job site to job site during the workday, is work time and must be counted as hours worked.

 

[mraikes]

Based on everything mentioned so far, it's time to get a grip on the employee vs contractor thing. Someday it's going to really bite you where the sun don't shine.

You're calling them employees, but want to treat them like a blend of employee/contractor. Someday you may regret hiring an employee that realizes that situation isn't as it should be.

And I find it a bit humorous after this discussion to announce "we're hiring!" I'm curious how much your employees pocket on average per appointment (not your total bill, but their actual pay). Is it enough to make up for the negatives discussed so far?

 

[JustMe]

Here's my thoughts on this now that I've had time to sleep on this...

One of the dilemmas that we all will face as a solo shop is how to take our business to the next level. We want to hire someone to help with the work load and to expand the business.

Remember when you work solo... how many billable hours do you average in a day? For me I have 3 to 5 hours. The rest of the hours I'm either driving, on the phone or doing other tasks that do not produce any immediate income.

Now for me, that's just the way it is. But if I hire someone to help me, I am still paying them for those non-productive hours. So if I charge $80/hour, I make $240 to $400 a day but now have to pay someone $160/day @ $20/hour x 8 hours/day. Once I factor in payroll taxes, medical, and all the other hidden costs of having an employee its actually around $30/hour. So I actually pay $240 a day in wages. Now if I have only 3 billable hours that day I make no money! Wow... either I find more work for my employee or raise my rates. Guess which one is easier?

This is why the rates you charge your customers have to have this cost factored in. GeekSquad and other large service companies charge a lot per hour on-site for this very reason. They are not ripping off the consumer (although it seems like it). They have this cost factored into their rates.

 

[techlabco]

Oh yeah. I know I have to talk to an accountant or lawyer...need to start examining hours worked. Will need to pay that asap. Because I want to run a clean operation! Actually, 2 of my guys have quit their others jobs because they make enough to keep it as their only source of income. @ (forgot who said it) but you said the best companies don't pinch on employees--I completely agree and I don't want to do that.
Yes, I am considering starting another Mobile Operation in Las Vegas because expenses are so low there. Honestly, it's not paying my guys for road time that irks me....just the high bill from the state and city when I do taxes. California is horrible to small business...that's another reason I am so aggressive about expanding and saving--so I can get ahead a bit and go into other states too....
and yes, that last bit about hiring....lol...yeah, after I wrote that...and was like ????
why did i do that?? especially on this discussion!

 

[NeutronTech]

I know I have worked for a couple cable companies and a sattelite company. I worked for them as in-house technicians. I realize they have deep pockets, but we weren't even allowed to do paperwork without clocking in first. Every minute we did anything work related had to be accounted for. If I hadn't got paid for drive time I would have quit. I've had too many slow days where I had one morning job, and one after 4 job. Both easy trouble calls taking no more than 15 minutes each. There is no way I would have waited all day to do the other for nothing. I realize you could go do personal things during this time, but you are still trapped by the time constraint of having another appointment.

That said, you might want to consider making the contractors. I don't see how them wearing your shirts would be misrepresenting. Every company I have worked for a a contractor, I had a company shirt. I worked for one company as a sub and they wanted us to be indistinguishable from the in house techs in appearance. You could:

-have a weekly minimum that everyone will make. If they make more than that in the week the get what they made. if they make less than the minimum, then you pay them the minimum rate that you set. Say, for example the weekly minimum is $400. If your guys don't make at least that, then you pay them the $400. But if they make $600 for the jobs they did that week, you pay them the $600. I don't know if you pay them buy the job or by the hour, so this may or may not apply.

-not pay them windshield time unless they drive over a certain duration between jobs. For example, more than a half hour between jobs you can get "non productive" pay, A reduced flat pay rate. That would cover long travel times and traffic jams. That would even cover long waits between jobs.

-You say you have 5 guys. If you can't afford to pay them for the hours they are on the clock, maybe you should consider reducing your work force. If that means shrinking your service area, then so be it. It's obviously not cost effective anyways.

Employees are what make you your money. They make or break the business. If they are unhappy, you will have unhappy customers. If they are happy, expect happy customers. The companies who realize this are the ones who truly shine.