Jeff,
Thank you for all you do for us in the field!
I have a question regarding tracking time and compensation of recruiters. You are aware that many of us work more than 40 hours a week, probably more like 56, and much is performed away from the office.
I don’t track my time or that of my recruiters. Should I?
I read a case brought by a group of recruiters a year or so ago in which they claimed that although they received a base (draw against commission) and were paid an agreed upon percentage of a fee, that they should also be compensated for the overtime they worked even though a placement was not guaranteed outcome of that work and the time spent was discretionary.
As an owner, should I have recruiters complete timesheets? Should recruiters be paid for all the hours they work? Should researchers be compensated differently then recruiters who have split desks or are out of the office more in a sales/recruiter role? If so, how does one account for the time spent responding to email while watching a movie for five minutes. or taking the 20 minute phone call?
Thank you for clarifying my lingering concern.
Tonya Preston
Hi Tonya,
When I receive questions like this, I’m so impressed! This is something only a regular JOC reader would ask.
Don’t you feel like an ATM when talking about draws? And did you know you can use the ATM to pay your placement payees? Our clients have been doing it for years!
I’ll give you detailed instructions before we’re through.
But now, a reality check. Does this sound like you?
Our office is a closely-knit family. We only have a few recruiters. Nobody worries about the hours, just the billings. That’s all that really matters. It all averages out to more than minimum wage anyway.
Who’d argue? Nobody receiving a regular paycheck. Anybody who stops receiving one.
So there’s no overtime for recruiters . . . until they leave. Then it can get r-e-a-l-l-ly expensive. When they tell all your past and present employees, it gets downright devastating. Straight time, overtime, interest, penalties, fines, imprisonment. Usually going back three years. For each employee. The audits and hearings alone are horrific.
Let’s see how much you really know about running the biz. Close this screen, and:
Okay, welcome back. “ATM” stands for the Allen Timekeeping Method.
Now on to the simple ATM instructions.
Set up a procedure for the submission of weekly sheets. The sanction for failing to do so is simple: the recruiter is believed.
The recruiter just completes and submits a simple form that takes a few minutes to prepare and copy. The only requirements are spaces for the dates and hours worked, signature of the recruiter, and date of submission. If the same number of hours appears every week, the draw will be the same. If not, it will vary. (Don’t pre-print the hours. Do, and it will look awful when you need it for authentic-looking proof.)
Then determine a base rate that will result in the draw you’ve negotiated with the recruiter. The minimum you can pay is your state’s minimum wage. There is no maximum.
Example: Let’s assume you and the recruiter decided $20 per hour would be the draw. If the time card says 40 hours (8 per day), the gross amount is $800 for that week. If it says 50 hours, add another $30 (time and a-half) for the 10 overtime hours, and the gross amount is $300 more, or $1,100. Then pay at the next regular pay period (at least twice a month), less all payroll deductions. Deduct the cumulative draw (total “red figure”) from total commission and issue the commission check when it’s due, less all payroll deductions.
You can require approval of overtime in advance. However, you’re liable for paying it anyway (even if you ordered the employee not to work extra hours). You’re also liable for the time a recruiter spends goofing off. Why? Because you can’t prove it wasn’t spent working.
So rather than fighting the fact that most recruiting (and goofing off) is done after hours, capitalize on it. Encourage your recruiters to work from home. Merely lower the base rate (but not below minimum wage) so you can pay the agreed draw. Then monitor the time.
Monitoring is your responsibility. It can’t be delegated to the recruiter. No “honor system.”
Upon receipt of the completed time sheet, you add up the hours, multiply them by the hourly rate (including any overtime), and pay the recruiter at the next pay period.
Bingo!
In most states, you can give an employee “comp time” (compensatory time) in lieu of overtime. This means 1½ hours off for each overtime hour worked. It usually must be in the same work week.
Federal law doesn’t permit trading comp time for overtime. However, since there is no daily overtime (over 8 hours) under federal law (only after 40 hours per week), you can trade as long as the total number of hours worked in the week doesn’t exceed 40. If the recruiter works 50 hours in one week, the 10 hours of overtime become 10 + 5 = 15 hours for use as comp time. Both should be indicated on the time card.
As long as you’re accounting for overtime and paying or computing it pursuant to state law, the feds probably won’t bother you.
But make a mistake here, and the federal and state labor enforcers can scour your files for violations going back three years. Overtime, payroll taxes, interest, fines, imprisonment.
Ouch.
The wage and hour laws are complicated, constantly change, and no two of the 50 states have the identical laws, cases and administrative rulings. Whew! So check with your lawyer and accountant regularly to ensure compliance.
Follow these Allen Timekeeping Method instructions to the letter, and you’ll automatically thank me every time — just like that other ATM!
Thanks for this important inquiry, Tonya.
Best wishes for continued success!
Jeff
