Pros and cons of hiring employees

[Bowhunter01]

How many you all have employees on your payroll? I'm at the point where I'm going to need a guy or two full time during the spring summer and fall. I've been subcontracting my buddy, who has his own tree business (and licenses and insurance and tools) to do a lot of climbing for me the last couple years. He subs me out on his jobs to chip brush and haul logs. Its been working out pretty well, but its at the point where we either need to join forces or I'll need to hire someone to fill in when my buddy can't.

I'm apprehensive about the costs of having an actual employee or two. Can someone help me get an idea of what kind of overhead I'd be looking at, such as worker's comp, insurance requirements, benefits I'd have to offer, training I'd have to provide, etc? What other considerations are there?

I'm on the fence, whether I keep on at the same crazy speed as a one and a half man show, or hire some help and take on more work. I'm doing all the estimating, billing, purchasing, maintenance, etc, and I'm on every jobsite from start to finish. Six days a week from march to november is wearing me down. It would be good to have some help, but I don't like the idea of giving up control of the actual work. I know plenty of you have been in this same boat, help me out with some ideas. Thanks guys.

 

[TreeAce]

In the January edition of TCI magazine there is an article about employee "leasing" . Does anyone have any experience with this? Maybe this is somthing that could help u Bowhunter. I know I am interested in hearing how/what others are doing.

 

[jg55056]

It is hard to find a good worker. In MN my wk comp rate is about 23%. It costs about 1.75 times what I pay the person for overhead. Pay 10/hr costs 17.50/hr. As a small employer I am not required to pay bennys. The worker that I have now is good but it is hard to find good workers that are willing to work for what u can afford to pay. I pay just under 15/hr for grunt work. I cannot afford to hire a full time climber. I sub that out at around 40/hr or climb myself.......when the bucket won't reach. Also... I have never had any luck with temps. They don't care about anything. Start off small. Don't try to hire out too much at once. I use adp to process my payroll. I would recommend finding a payroll comp. They do everything for u. U just call in hours and earnings...... about 75/month

 

[JCONN]

As good as employees are they can be even more of a pain. Sometimes employees can create more head achs then they do good. If you want to test the waters with employees around me you can go to companies like labor ready and find workers. The nice thing about this is that you call they send a worker if they dont work you tell them to leave and they send another. Then they take care of the work comp and everything. If you find someone that works you can request that person whenever. Just an idea it will let you get a feel of all involved with employees but allows you not to have to set up all the work comp and insurance crap. I used to work for a guy who payed me payroll then I went on my own and did sub work for him. Two years later he got a bill for estimated payments of like 30 grand becuase they said he was trying to avoid paying. He had to come up with reciepts and invoices it was a huge pain.

 

[ducaticorse]

How many you all have employees on your payroll? I'm at the point where I'm going to need a guy or two full time during the spring summer and fall. I've been subcontracting my buddy, who has his own tree business (and licenses and insurance and tools) to do a lot of climbing for me the last couple years. He subs me out on his jobs to chip brush and haul logs. Its been working out pretty well, but its at the point where we either need to join forces or I'll need to hire someone to fill in when my buddy can't.

I'm apprehensive about the costs of having an actual employee or two. Can someone help me get an idea of what kind of overhead I'd be looking at, such as worker's comp, insurance requirements, benefits I'd have to offer, training I'd have to provide, etc? What other considerations are there?

I'm on the fence, whether I keep on at the same crazy speed as a one and a half man show, or hire some help and take on more work. I'm doing all the estimating, billing, purchasing, maintenance, etc, and I'm on every jobsite from start to finish. Six days a week from march to november is wearing me down. It would be good to have some help, but I don't like the idea of giving up control of the actual work. I know plenty of you have been in this same boat, help me out with some ideas. Thanks guys.

Just had this conversation last night with a cpl members of this forum. Depending on what WC is in your state, you can figure anywhere between 1.5-2 times whatever your wage is to the employee to figure out what they're going to cost you. Simply put, it's ###### expensive

 

[jg55056]

I would not use a temp agency. There is a reason why workers in a temp agency are there.............they can not hold down a steady job. I have never had trouble finding a job there is always work for good workers.....................people in a temp agency are looking for a quick buck with no commitment. You need to find someone who wants the work and is willing to find it. Not someone who has been fired from everywhere else and now resorting to a temp agency for employment. I wouldn't be so opinionated but my experience with leasing companies has left a bitter taste in my mouth. Just my 2cents. A workcomp policy will be audited at the end of the policy period and you need to provide documentation of legit subs. If you have the proper docs an audit is easy................if you hire people that do not meet the requirments of a legit subs u can expect to pay the work comp on them

 

[TreeClimber57]

It is hard to find a good worker. In MN my wk comp rate is about 23%. It costs about 1.75 times what I pay the person for overhead. Pay 10/hr costs 17.50/hr. As a small employer I am not required to pay bennys. The worker that I have now is good but it is hard to find good workers that are willing to work for what u can afford to pay. I pay just under 15/hr for grunt work. I cannot afford to hire a full time climber. I sub that out at around 40/hr or climb myself.......when the bucket won't reach. Also... I have never had any luck with temps. They don't care about anything. Start off small. Don't try to hire out too much at once. I use adp to process my payroll. I would recommend finding a payroll comp. They do everything for u. U just call in hours and earnings...... about 75/month

Problem is here (in Canada).. we can not legally get around WC. Contract or employee.. you have to pay it either way. Only way around it is hiring contract, and the person has proof of WC payment. (they issue a certificate as evidence)
Payroll company is good idea.. unless you have somebody who does your books for you and is good at payroll as well.. then you may save a few dollars but not a whole lot.

Question was Pros and Cons..

Well vs what.. no workers at all vs employees.. or employees vs contract work?

If the later that can be a lot different depending upon which country or state/province you are working in..

 

[ducaticorse]

I would not use a temp agency. There is a reason why workers in a temp agency are there.............they can not hold down a steady job. I have never had trouble finding a job there is always work for good workers.....................people in a temp agency are looking for a quick buck with no commitment. You need to find someone who wants the work and is willing to find it. Not someone who has been fired from everywhere else and now resorting to a temp agency for employment. I wouldn't be so opinionated but my experience with leasing companies has left a bitter taste in my mouth. Just my 2cents. A workcomp policy will be audited at the end of the policy period and you need to provide documentation of legit subs. If you have the proper docs an audit is easy................if you hire people that do not meet the requirments of a legit subs u can expect to pay the work comp on them

Well the damn temp agencies around here pay minimum wage and no benefits. What else would one expect?

 

[TreeClimber57]

Well the damn temp agencies around here pay minimum wage and no benefits. What else would one expect?

:agree2:

 

[TreeAce]

I am starting to wonder if anyone in my area actually runs there company truely "by the book". I am starting to think its not possible. When I start pushing numbers....dont look good. I have seen to many other companies bids over the years and there is NO WAY they are paying WC. Although there have been some cases where a bigger company that I am sure is legit is awful cheap to so i dont get it.....

 

[ducaticorse]

I am starting to wonder if anyone in my area actually runs there company truely "by the book". I am starting to think its not possible. When I start pushing numbers....dont look good. I have seen to many other companies bids over the years and there is NO WAY they are paying WC. Although there have been some cases where a bigger company that I am sure is legit is awful cheap to so i dont get it.....

Some big companies bid jobs low just to keep equipment out, and employees paid. Lots of guys buy minimum WC coverage, and pay the help partial on the book, or completely off the book to beat end of year audits.

And people ##### and Complain when some business owners seek to explore enforcement and stiff punishment for companies operating without WC, and not playing by the rules.. Can you blame them when it costs them TWICE as much to do business than the illegitimate guy bidding on the same job?

 

[jg55056]

Did I mention provide legit documentation for subs. If they need to have their own wk comp policy and u hire a sub without it. It is your own fault for the liability obtained

 

[ducaticorse]

Did I mention provide legit documentation for subs. If they need to have their own wk comp policy and u hire a sub without it. It is your own fault for the liability obtained

Yup. If you're 1099'ing anyone.

 

[Toddppm]

All depends on where you want to go with your biz. You're gambling doing everything yourself. I know there's some guys on here making good money doing everything theirselves but all it takes is one minor accident and then who's going to pay your bills?
Workers comp is just another expense, I'm paying 12.5%, so what, that doesn't even account for payroll taxes, other insurance, fuel, admin, depreciation and every other little thing you should be billing for.
We do alot of other work besides trees and separate each job hours and pay the rate for it.
I've heard some large co's treat their guys as subs to avoid workers comp and have been doing it for years. Not sure how they do it but I guess they found a way and they work cheap as hell.
I have a couple guys that sub for me and I just go ahead and claim their $$ on my workers comp., not worth it not to.

 

[komatsuvarna]

I would not use a temp agency. There is a reason why workers in a temp agency are there.............they can not hold down a steady job. I have never had trouble finding a job there is always work for good workers.....................people in a temp agency are looking for a quick buck with no commitment. You need to find someone who wants the work and is willing to find it. Not someone who has been fired from everywhere else and now resorting to a temp agency for employment. I wouldn't be so opinionated but my experience with leasing companies has left a bitter taste in my mouth. Just my 2cents. A workcomp policy will be audited at the end of the policy period and you need to provide documentation of legit subs. If you have the proper docs an audit is easy................if you hire people that do not meet the requirments of a legit subs u can expect to pay the work comp on them

I agree with this. Ive had good luck 1 time out of probably 12-15 times. Ive ended up with some dooesys that cant even flag traffic....come in every morning and smell like a brewery..and it goes on. I also ended up with a guy that had CDLs, and was a damm good worker. I worked him the minimum time through the temp and hired him full time, that was almost 2 years ago.

Well the damn temp agencies around here pay minimum wage and no benefits. What else would one expect?

They pay minimum wage here, but if you want to pay your temp more you can. They just bill it to you., but most that Ive had isnt worth no more.

 

[Toddppm]

I forgot

Pros:
I get most of my estimates done during the day, no weekends unless an emergency
Can take off whenever for the most part
If everything goes as planned I make more $$$$$$
Get to play with all kinds of trucks/equipment etc.

Cons:
Full time babysitter to employees
Have to keep selling work to keep going
If anything goes wrong I make less $$$$
I have to maintain all kinds of trucks/equipment


lots more just a quick run down

 

[TreeClimber57]

Did I mention provide legit documentation for subs. If they need to have their own wk comp policy and u hire a sub without it. It is your own fault for the liability obtained

Here you can hire a sub without wc.. but then you are on the hook to pay it.

 

[TreeClimber57]

I forgot

Pros:
I get most of my estimates done during the day, no weekends unless an emergency
Can take off whenever for the most part
If everything goes as planned I make more $$$$$$
Get to play with all kinds of trucks/equipment etc.

Cons:
Full time babysitter to employees
Have to keep selling work to keep going
If anything goes wrong I make less $$$$
I have to maintain all kinds of trucks/equipment


lots more just a quick run down

Good summary..

There are actually a LOT more cons than pros IMHO.

The BIG pro is "If everything goes as planned I make more $$$$$$".
The smaller perks are "I get most of my estimates done during the day, no weekends unless an emergency" and "Can take off whenever for the most part".

But a lot more paperwork, expenses are higher. You NEED ALOT more work.. because NOW YOU GOTTA keep things moving all the time. If by youself maybe 2 or 3 days a week was ok.. but now not so.

 

[jg55056]

Some big companies bid jobs low just to keep equipment out, and employees paid.

I can say I've done this a time or two. It's beneficial to keep a good crew employed even if your margin for profit goes down. Just so long as I'm not "buying" the work. :cool2:

 

[pdqdl]

Well the damn temp agencies around here pay minimum wage and no benefits. What else would one expect?

Most temp agencies have several classes of employees, and there are specialty temp services for specialty jobs. You can hire temp-drivers, temp-welders, temp-dentists, etc.

Shop around!