382: Hourly or Salary? - Robyn Reis

Hourly or Salary?

Episode #382 with Robyn Reis

Whether you decide on hourly or salary, be sure to do your homework! And to help you determine which may be best for your practice, Kirk Behrendt brings back Robyn Reis, an HR expert from Bent Ericksen, to share everything to consider when choosing hourly or salary for your employees. To learn about the benefits, pitfalls, and the laws you need to know, listen to Episode 382 of The Best Practices Show!

Main Takeaways:

There are advantages and pitfalls for both hourly and salary.

Consider every circumstance that a salary is going to cover.

Quarterly audits are essential for salaried team members.

Have all expectations in writing to avoid future problems.

Schedule regular check-ins with team members.

Be sure to follow the wage and hour laws in your state.

Quotes:

“It’s all about predictability. People think that when I give somebody a salary, it’s predictable. They know when they're going to get their paycheck, how much they're going to get paid. It works for a lot of people. But the caveats that go along with a salary are twofold. One is classification of the employee is first and foremost. And that is, are you exempt or nonexempt? No matter how you pay somebody — hourly, salary, commission, per diem, in blueberry pie — it has to be determined whether they're exempt or nonexempt. That's according to the federal Fair Labor Standards Act. And that's part of the Wage and Hour Division laws that govern how much taxes are taken out and all that good stuff.” (4:36—5:28)

“What you want to think about when it comes to that predetermined or predefined salary is, are you making sure that they're getting paid for the time that they work? So, even as a salaried employee classified as nonexempt, you still need to clock in and clock out. You still need to verify your time. That's part of the record retention requirements and the timekeeping. Again, keeps everything fair and equitable. People are being compensated for the time that they work.” (8:56—9:29)

“When you do give a salary to a nonexempt employee, you want to make sure that you're accommodating or counting on all the hours you expect them to work.” (10:45—10:56)

“[Expectations are] absolutely huge because a team member has to understand, a) how do they earn their paycheck, and b) when there are some incongruencies that there is something to go back to to say, ‘Wait a minute. This is what I understood.’ So, having it in writing is key. It’s not only for the team members’ understanding, but for protection of the doctor so that they can say, ‘Yes, I'm following all the employment compliance laws that I need to follow for my particular practice in my state, and this is where we start our relationship and our channels of communication.’” (13:23—14:05)

“Putting it in writing means that there is less chance of, ‘Wait, nobody ever told me that,’ or, ‘I thought it was this way.’ Putting it in writing lessens the chance of miscommunication. And when push comes to shove, there's no, ‘He said she said,’ or, ‘I thought she meant that,’ or, ‘He promised me this.’ Every lawyer everywhere will tell you, if it’s not in writing, it didn't happen, much like the patient records.” (14:05—14:31)

“Putting it in writing is really, really important for that employer-employee relationship. No misunderstanding, no question marks. ‘These are your hours. This is your schedule. This is what is expected of you. These are your benefits. And this is what you're going to be compensated.’” (14:52—15:10)

“The pitfalls are, when you do a salaried employee, you still have to watch your hours. They still have to track their hours. So, as a nonexempt employee, they still have to track their hours. I would recommend that somebody who pays their team on salary, once a quarter, go back and audit, ‘Are we in alignment with what the expected hours per week were, what the hourly rate calculates out through the salary, and did we miss any overtime timeframes during that pay period?’” (20:08—20:50)

“Some of those weeks might be holidays, or maybe they get sick. So, you have to have that conversation too that, ‘Okay, if you worked 40 hours in a workweek, we anticipate that there's going to be five recognized holidays. The salary includes all that. Those 40 hours includes everything: vacation, time off, etc.’ So, you have to consider everything that that salary is going to cover.” (21:28—21:58)

“If you do the salary, I would recommend a quarterly audit to make sure that you're still legally meeting those wage and hour laws of 40 hours a week. And in California, it’s a little bit different. They have their own wage and hour laws. But you are still compensating your team. And if you discover in your audit that you're a few hours off, or you owe them overtime, or whatever it is, then you just make it up in the next pay period.” (22:06—22:37)

“The benefit of hourly is you're tracking time. You're getting paid for the hours that you work. That is plain and simple. There’s no negotiation. There's no mystery to it, whatsoever. There's nothing really to calculate. You worked 40 hours, you get $10 an hour, you get $400, whatever it might be. It is something that most people understand. They can budget or know what to expect, which is very similar to the salary if they know that, ‘I have a consistent schedule. And occasionally, I might have to work through my lunch. Occasionally, I might have to work after hours or come in early for a team meeting,’ or something like that. But I still know that when I clock in and I clock out, my time is recorded. I'm going to be paid those hours at the rate that I was informed about, and I agreed to.” (30:13—31:06)

“If you have somebody that consistently works overtime, then that's the pitfall. That is something that you just have to plan on. Their regular hourly rate is $25 an hour. And when they work overtime, that's going to jump up to $37.50 an hour. So, if you consistently have to budget for it, but if somebody consistently works overtime, maybe you do want to have that conversation for salary. But again, depending on the classification, exempt or nonexempt. That's really what's going to drive what you are legally required to do.” (31:08—31:44)

“[Team members] want to know that they're appreciated. They want to know that their efforts are being recognized and that they're taking home a fair and reasonable wage. They don't want to feel taken advantage of. And so, having those conversations of, ‘You know what? Our budget can afford more than $20 an hour. But let's put our heads together. Let's put some performance goals and practice goals in place. And when we meet or exceed that, then I want to be able to give you a bonus each quarter.’ Or, ‘I want to be able to reward your efforts because we exceeded the collections goal for the past three months,’ whatever it might be. So, it’s not just about the dollar-per-hour or total salary package. It really is, how can we create more opportunities to reward people for the work that they're doing.” (33:54—34:50)

“A lot of benefits are discretionary. And that means it’s at the doctor’s affordability, without taking money out of his own pocket, or her pocket. There's no such thing as required paid holidays. There's no such thing as required paid time off or required vacation. Dentists don't have to do that. Dentists also don't have to offer free dental care to their team members or their family members. There's no law that says that they have to. Some states, yes, you have to provide sick leave. But all the other ones are discretionary. So, what does that mean? That means that the doctor doesn't have to, but he or she may choose to because that's part of how they show their appreciation.” (35:42—36:26)

“It’s not just about what you get in your paycheck — it’s everything together: uniforms, CE, fun stuff, having a beautiful office to work in, up-to-date equipment. All of it comes into what I call the huge compensation package.” (37:12—37:29)

“That person who is salaried still, legally, is required to get their salary whether your office is open or not. So, that's something to consider too. With hourly, it’s that old adage, you eat what you kill. You clock in, you clock out. These are the hours that you worked. These are the hours that you're going to get compensated. And if you work more hours this week, then you'll get the time-and-a-half. You work less hours next week, you're just going to get paid for the hours that you work. If you have to close the office because of inclement weather, you're not going to get paid for the hours that were not open. Those are the things that make it really black-and-white, super simple for practices.” (41:03—41:43)

“Most practices that I work with are hourly because it’s really clean and simple. There's no negotiation. There's no, ‘Well, what about this time? I stayed late here, and I worked over the weekend, but you didn't see it. And I don't think that my salary really is commensurate with the amount of time that I'm putting in, so I'd really like to renegotiate.’ So, again, there's room for both [hourly or salary]. You just have to decide, much like what kind of dentist do you want to be, what kind of business owner do you want to be, and what can the practice support.” (41:45—42:14)

“Do your homework. Make sure that you are following whatever wage and hour laws you have in your state. If you decide you want to make the leap from salary to hourly, or vice versa, give your team time to process that. There are numerous questions they're going to have. Again, give them the message that you want to make sure that you're paying them fairly.” (43:18—43:44)

Snippets:

0:00 Introduction.

1:38 Robyn’s background.

4:23 Why hourly/salary is an important topic.

6:08 Definition of exempt employees.

11:55 The importance of putting things in writing.

17:30 Kirk’s opinion on salary.

19:19 Potential liabilities and pitfalls.

23:10 How CE plays into compensation.

26:42 Salary versus commission versus hourly in hygiene.

30:03 Benefits and pitfalls of hourly.

31:44 The importance of benefits packages in dentistry.

37:29 Get creative with benefits and showing appreciation.

43:10 Last thoughts on hourly and salary.

44:57 Robyn’s contact information.

Reach Out to Robyn:

Robyn’s email: robynr@bentericksen.com 

Robyn’s Facebook: https://www.facebook.com/robyn.reis.7

Robyn’s website: https://yourdentalpracticecoach.com/

Robyn Reis Bio:

Robyn began her dental career in 1998 as a marketing and communications director for a large group practice, and instantly fell in love with the world of dentistry. She has spent every waking moment since learning, growing, and collaborating with dentists and their teams utilizing her expertise in all aspects of dental practice management, marketing, communications, HR, continuing education, and laboratory sales. Robyn's personal goals are to make a difference in someone's life every single day and to give the best of herself to those around her. Robyn and her family live and play in Northeast Ohio.