Salary changed to flat rate?

[Dancemom03]

DH is the shop foreman for a small automotive business. For the past twenty years, he's been salary so that they didn't have to pay him overtime. It's not an hourly salary, but a weekly set salary that doesn't fluctuate with hours worked. Even being salaried, he's never had sick leave, also no retirement or company paid health insurance. He opens the shop at 6:30 am - hours before the owner or other employees arrive - and closes it at 5, all without even logging out for lunch.

This year we've had to cancel three wdw trips because the owner decided last minute to travel with his family that week and DH was left running the shop. That's not unusual, but it was more irritating this year b/c owner claims he is losing money. Since a good part of the business is government fleet accts which have stayed steady, it isn't from there. After a conversation last week, he said that he just felt like he wanted to make more and, with the economy the way it was, planned to go to flat rate so he could increase his profits.

For several months the owner has been saying he was going to put everybody on flat rate but the recent explanation that he just "feels like he wants to make more b/c his personal living expenses have increased" is upsetting. For DH, that would be a huge pay cut, especially given that the office staff is slow to sell walk-in jobs and he is in the shop for so many hours each day when nobody else is there yet just to open doors, handle calls & drop-offs.

I know times are tough right now but wondered if this is legal? Would the change in contract be grounds for unemployment if he decides not to stay? TIA

 

[meriface11]

i'm an HR Director, so i might be able to help, but i'm not sure what you mean about a "flat rate"? do you mean annualized salary calculated based on an assumption of a certain # of weeks/days being paid time off, as opposed to a weekly salary where he gets paid if he works and doesn't get paid if he is off?

 

[CarolA]

I suggest your DH contact the Dept of Labor in your state and file a complaint. In most states there are some labor laws being violated!

You can't just flip a job to salary to avoid overtime....It's a cute idea but doesn't really work that way.

I agree with the HR Director above. What the heck is Flat Rate?

 

[disneybridetobe]

That happened to DH's boss, I'm not sure how legal it is. I agree with filing a complaint with the Dept of Labor.

 

[michael's mom]

I am guessing that since he is a automotive mechanic, flat rate is "pay for the work you do, not the hours your here?" A complete guess, but if you fix 10 cars you get the labor for 10 cars...if you fix 2, you get the labor for 2.

 

[ChickieToo]

Maybe I can help a little bit. We are franchise owners of a national car care chain. My husband is partners in three stores, and his partner has additional stores that he either owns outright or has with other partners. Our situation may be a little differenent because we have franchise and advertising fees that we pay off the top every week, so our financial structure may be a little different. I am involved in the business too. We treat all stores as one group for buying power and insurance, payroll, etc. I do payroll, insurance and that sort of thing. I'll go through your questions as best I could:

Flat Rate: It is usually for technicians who spend their time working on cars. What it means is, that you get a high hourly rate with no commissions or OT, like, $20, $30, $40/hour. But you only get paid book time. So if the the Chiltons or AllData labor guides say a certain job should take 2 hours, the technician will get paid for two hours labor regardless of if it takes him one hour or eight hours. For someone who really hustles in a busy store with high sales, this can work out well. We don't pay this way because during slow times the techs don't make any money. For a guy like your husband who manages people and has opening and closing duties I really don't know how this would work.

Can an owner just come in and change your pay? In our state, which is Connecticut, the answer is yes. It is up to the employee to accept or decline the changes. If he declines I think he will be eligble to collect unemployment. We pay our managers a small salary and make up their pay with commissions on how the shop does that week. We have a store that is really tanking, and my husband had to do some drastic things so we can catch up on our bills. We were well behind and my husband can't take a check from there. It is really the managers fault because he isn't selling to the prescribed guidelines and he's under cutting jobs, so we were just breaking even on the work we were doing. Everyone was getting paid: the manager, the technician, every one except us and the bills. So my husband explained to him that until he starts pricing jobs correctly and the store is profitable, he has to take a pay cut. The manager didn't want to loose his job in this economy so he signed off on it. And, miraculously, in two weeks he has completely turned around. He will probably go back to his regular pay soon.

(And before people go on and on about how unscrupulous car repair facilities are and selling work at high prices is a ripp off, etc. let me just say that numerous times my husbands' stores have been "shopped" where people come in and try to trip you up and have you sell unnecessary work, and he has always passed with flying colors. Undercover news crews have come back into the store to congratulate him on a job well done).

Lastly, your husband's boss sounds like a jerk. We give 6 sick/personal days a year, and a weeks vacation after a year of employment. We also offer 401k with a small company match. We provide access to health insurance. That is a tough one. There is no way we could pay that for everyone--we would be bankrupt in a month. We never tell anyone they can't take their scheduled vacations (we have a one month notification policy) unless there is some serious problems like when my husband's partner's wife died. I don't know where you live, but my husband would love to have a dedicated, serious employee such as your husband. The industry is full of fly-by-nights.

More about the boss: Although I don't know him, I can tell you that even just 20 years ago there was tons of money in this industry, and a lot of these people got very rich. Our partner who has been at this over thirty years lives in a multi-million dollar house. But it is all from the old money he made. Things in this industry are really tight right now. Everyone is squeezing everyone else. Owners had a lifestyle they want to maintain, repair facilities want to pay less for parts, suppliers want to sell parts for more, payments are now due in a shorter time frame that previously, heating oil fluctuates--it really is bad out there. However, the owner shouldn't be telling people that his personal expenses increased so he needs more money. That's like an employee saying I need a raise because I bought a new car. Sounds like a personal problem. Should the owner make money? Yes. He took the risk, started the business and will be left holding the bag if the business goes under. But in these tough times he can't possible expect to make what he made in the boom times.

Your husband should actively seek other employment.

Let me know if I can help you with anything else.

 

[Dancemom03]

Thanks so much for your responses. The flat rate structure Chickietoo refers to is exactly what I was asking about. It's the reason that he's never worked for a dealer, even though they offer benefits. Years ago, when we were first starting out, a friend made all of $125 in two slow weeks at a dealer in AL and we've always remembered that.

He had worked for a national franchise (think beep-beep) as a builder and also opened & closed, plus managed and sold when necessary. Over the past thirty years he's had several owners as the shop changed hands. The last time, he left with the owner for an independant he bought that has general automotives plus a seperate body shop and really enjoyed doing something different each day for a change after years of standing at a bench and dealing with franchise rules/home office issues.
In the early 90s, after seeing how many hours he was putting in, one of the former franchise owners redesignated him as management & put him on salary so he hasn't been paid OT in years. Back then, they took an average of his weekly checks and used that amount for a salary. He hasn't had a raise since.
Originally, he had two weeks vacation, but that decreased to one week after he'd started the current job, and at that point it was a job or no job as he'd already packed his tools. The last time we had any help with health ins was when DD19 was born in 1989 and it even didn't last as long as her well baby checkups. We've never had retirement, 401K, scheduled raises, or benefits.

DH is a workaholic, which is why the girls and I sometimes travel without him. When he's away, he's worried about what's going on there and who's messing what up so I guess a week is enough for him, but lately the owner (who we always considered a friend of sorts) is feeling stress (kids in elite schools, one starting college, nice trips, the good life in a down economy...) and things get really unpleasant when they don't go his way. Owner doesn't sell well and doesn't especially like to talk to people. Managers come and go but haven't had any that really sold well since the last franchise. As with everywhere else, they run ads and get newbies with few/no tools or those who don't really want to work and the new hires don't stay. Often they say it's b/c of owner's temper.

DH is finally ready to move on, we talked about selling the house and using our equity to pay cash for another in FL, GA or SC but the market is awful right now. We also can't live on flat rate and sleep at night too though b/c we have kids and a mortgage to pay. We might be able to survive on unemployment for a short time if we put the house on the market for a lower than market price that'd still leave us enough to buy elsewhere but that's still uncertain as there's no guarantee how long it'd take to sell or when he'd find a job in a new location.

At this point, he's hoping that if he can find some labor law which states owner's flat rate idea is against regulations that he can speak with the owner and his job won't go flat rate even if the shop does.

 

[Dancemom03]

I am guessing that since he is a automotive mechanic, flat rate is "pay for the work you do, not the hours your here?" A complete guess, but if you fix 10 cars you get the labor for 10 cars...if you fix 2, you get the labor for 2.

Problem is that the owner/manager have to actually sell the jobs or there isn't anything to fix - hence no pay at all...

 

[daughtersrus]

My DH is an journeyman auto tech at a Lincoln/Mercury dealer. He is paid "book time". Like others have said, he is paid based on what he does. The problem is that Ford has cut repair times on warranty claims almost in half. What used to pay 4 hrs may only be paying 2.1hrs. That being said, he is union and their contract guarantees them 36hrs. So even if it's slow, they're paid 36 hrs as long as they are at work 40hrs. Under their old contract, they had a daily guaranty that really helped keep the work being handed out fairly. Now, that it's back to weekly, he can have nothing to do one day but still have to stay and then get hit with tons of work the next day. Even though DH averages over 40 hours a week, he'd still prefer to go hourly but he doesn't see that happening with at least this next contract in Aug. DH has insurance through the union as well as a pension. He is able to contribute to a 401k but without any company matching.

As for the managers(parts and service depts) and service writers, they are paid a base salary for the week and then commission at the end of the month. However, they are non-union. They have insurance through the dealer but it's quite expensive.

My DH always says that the auto business is unlike any other business out there. I'm finally beginning to see what he means. It's only taken me 23 years.

I wish you DH the best of luck!

 

[CarolA]

A couple of things.

1. The owner probably did the wrong thing years ago. You can't just swap a job to salary without some reason. (And if your reason is "I want to avoid overtime" that's probably an issue) I can't recall the entire mess but we got into this with one of my father's employees. Moved her to salary at HER request. That way she could work "fewer" hours when it was warm and our business was slow. However, since she did the same type of job as other hourly employess when she decided to leave she went to the Dept of Labor. We wound up paying OT and meals for back pay for a year with NO allowance for those weeks where she worked LESS then 40 hours. (Taught my dad a lesson, quit doing stupid stuff!) The fact that they are hiring managers while designating your DH as "management" raises a flag!

2. If he goes to Flat Rate then he either (a) needs to negoiate an hourly rate for those opening and closing rates or (b) a 'by the job' fee for phone calls etc.

Seriously I think he could find a job. I was talking to a friend whose father owns a dealership. NOTHING is selling but the repair side is SUPER busy right now. People are keeping the car longer and therefore having to do service

I think he needs to call his DOL and walk through the ENTIRE history and see what they say based on your state laws!

 

[PA Princess]

I also am the wife of an auto mechanic. My dh works for a Ford dealership and he has been paid flat rate for over 10 years. From our experience, I would encourage you not to be afraid of flat rate in a healthy shop or dealership (not saying that is where he is now, but perhaps in the future).

Dh works for a large dealership and he gets all regular job kinds of perks including a 401k, paid vacation, insurance, Christmas bonus, etc.

Our experience with flat rate is that some times you make more (work 45 hours - his standard work week - and get paid for 70 hours) and other times you make less. In the end it evens out. Yes, there are slow times and it can be tricky to navigate flat rate since it is not as known a way to be paid. When you are on a clock you need all involved to be speedy - from seller the service to the parts people.

My dh has always made more yearly since going flat rate than he ever did at an hourly rate. Plus, if there is no work - he leaves. He is not union, no contract, and if you are not being paid to work, you may depart. Yes, it bites into your pay that day, but it is really nice to get those occasional mental health type days.

Summers and winters are always (and even in this economy have maintained this pattern) super busy, but mild weather seasons tend to be slow. We budget accordingly knowing when we are likely to get less and more.

My dh also has a significant teaching component to his work these days, and he always negotiates ahead how that will be paid...doing a job with pupil b that pays X and for teaching and repairing they will pay an additional amount on top of the flat rate. And as another said, warranty work is not a huge money maker.

Your dh should consider a dealershpi. If he is good at selling the work, he could consider a position as a service writer (they sell the services and pass them on to the mechanics). My dh loves the teaching so he is content to still "turn a wrench" but some day he may switch to service writing.

Hope that is helpful!

 

[bumbershoot]

"The flat rate structure Chickietoo refers to is exactly what I was asking about. It's the reason that he's never worked for a dealer, even though they offer benefits."


Hubby was a senior service consultant at Saturn. He's worked with cars for ages (though not recently for pay).


When I read him what I quoted, he said "whaaaaaaaaat???????"

He says you get paid by the job, not by the car...if a job pays 9 hours you make 9 hours of pay...if you can do two cars that had "9 hour" jobs, but not take that 9 hours, you've made 18 hours in that day.

Hubby has known of people who make serious money doing flat rate work.

Now, if this company still isn't going to do sick pay etc...he needs to go elsewhere.

Hubby says if you're not a good tech that doesn't know how to do the job well and quickly, then flat rate won't make you much, but if you're "worth your salt" you should be able to do 50% more than what you normally do.

Now I can't imagine your hubby is a bad worker. I bet he's very good!

When hubby was at Saturn (during his time there, they upped their CSI score by 10 points and they went from only covering 50% of their dealership costs to covering OVER 100% of dealerships costs, and out of all 4 dealerships of the group, his shop kept the second highest amount of money for the shop), they went from hourly shop to a flat rate shop, and across the board every mechanic made 50% more pay. The potential for the whole shop to make more money is "exponential", he says.



Unless you're working for a FABULOUS place where they really take care of you (and this place isn't), hubby would always recommend finding a proper place to work with sick time, vacation time, etc, and just see how that would work out for you. Since this place isn't getting much work, well, some other shop IS getting that work. Go THERE.



About the Ford thing...hubby says that Ford shouldn't be able to do that, b/c it alienates dealers...so your hubby should just move away from that dealership (see if it's really Ford doing it). If Ford cut it by 10-20% that's something else, or if they've changed their times because places using pneumatic tools vs hand tools than that's OK...but to just cut things in half...that doesn't sound right to hubby based on his management experience with dealers.

 

[KNJWDW]

My husband is a Service Director at a dealership and I asked him what he thought of this. He too, like some of the previous posters have mentioned, said that a good tech can make a lot of money on a flat rate pay plan. Your hubby sounds like a real hard worker and someone like that is always in demand. What happened to your hubby, happened to mine many years ago. He worked for a small shop and was paid only hourly wages, no overtime. Somehow, the dept. of labor found out and and the employer had to go back and pay all the wages.

Your hubby should really check out a dealership. While, they don't have the best beneifits, they usually offer vacation, 401K, inusrance plans, etc.

 

[daughtersrus]

About the Ford thing...hubby says that Ford shouldn't be able to do that, b/c it alienates dealers...so your hubby should just move away from that dealership (see if it's really Ford doing it). If Ford cut it by 10-20% that's something else, or if they've changed their times because places using pneumatic tools vs hand tools than that's OK...but to just cut things in half...that doesn't sound right to hubby based on his management experience with dealers.

I guess that I should clarify. Ford's warranty times are very low. If Tech A is doing a job on a car under warranty and Tech B is doing the same job on a car out of warranty, Tech B is going to "book" almost twice the hours that Tech A is for doing the same job. Now that warranties are longer, more of the business at the dealer is for warranty claims.

The other thing to keep in mind is that the work may not be handed out fairly. In the many 25+ years that DH has been at this dealer, they have had their share situations where the dispatcher or service writer is handing out the "good" jobs to his buddy while burying the guy that he may not like with nothing but warranty for the week. The buddy books 75+ hours while the other guy makes guarantee. This is why a lot of the guys in the business would prefer to go to a higher hourly rate instead. Even if you're good, the work that you get is determined by someone else.

DH is good at what he does. He spends a lot of time that he's not getting paid for helping other techs diagnose problems. As a matter of fact, he had a customer's LS home every day this past week trying to get it to act up. It's the third time it's been to his shop and the service manager asked him to drive it and see if he can figure out what's going on with the car.

As for leaving the dealer, he really can't do that. He's been there so long that he's third in seniority and he would loose that and start at the bottom at the new dealer(he gets 4 weeks vacation and would go back to two, he'd be the first to be laid off if they needed to...) We also have a DD with a rare genetic disease so we need to keep our insurance with the union. He's thought about it but he's making good money even with the cut in warranty times. There are also quite a few guys already on the list at the union looking for jobs.

 

[stephie1012]

if some how he can convince the owners to start selling the jobs i would go for it. DH is foreman at a dealer, he used to work for a mom and pop shop. we were so nervous when he switched jobs, but its been sooo much better for us...Dh has had wks where he has made over 80hrs and was only there for 40hrs. There are some guys who dont make there time...if you only make 35hrs they pay a little more then min wage for the other 5hrs of a typical work wk.
like i said im not sure of the legality's with what his boss is doing, but if hes trying to cut costs i would start to look elsewhere, who knows what else hes going to cut kwim?

 

[BeckyScott]

My DH was a Nissan mechanic for a very long time.

He was "guaranteed" minimum wage every week, if the flat-rate for the week was lower than 35 hours of minimum wage. Which of course, was very little money.

I remember nobody there wanted the warranty work because it paid so much less than non-warranty.

He was the senior mechanic and often would have the other mechanics need advice or assistance. He wasn't compensated for that, and that was a big problem. Your DH should try to work out something for that situation. While DH would be over giving JoeBob a hand, there was a car in his bay that he wasn't working on, and not making a penny. It got to the point where he'd just refuse to help anyone, which isn't a good working atmosphere, and that should be brought up to your DH's boss. If he's expected to help any of the other guys, he has no intention of doing it unless he's getting paid for it. My DH also did other stuff regularly-- like "selling" repair work (the cars did need it, it's just the the service advisor wasn't very bright) and occasionally even "selling" new cars (he had some very loyal customers and when they were ready to buy, they'd come to him for advice). He never got compensated for that stuff, either. I don't know how many times he went out into the lot with someone and sold them a car, and the salesman did nothing but the paperwork, got the commission, and DH got not as much as a "thank you".

The "good" part was, like a PP mentioned, he was there at 8 and not a minute before, clocked out for lunch at exactly 12, left at exactly 5, period, end of discussion.

All of those scenarios should be brought up with your DH's boss, to see what he has to say about it.

My DH is no longer an automobile mechanic, because we were having a bit of trouble living off of $200/wk. And part of that going to the Tool Guy, of course. It's really pretty sad when someone has been working in the field for over 20 years, and is a senior mechanic at a dealership, but the kids qualify for state-paid health care and reduced lunches and the guy is eating Ramen for lunch.