Employees- Salary, Hourly or Contractor?

Jul 25, 2022

We get this question a few times a year so rather than continually trying to point readers to the correct forum post I thought I'd quickly write up my views in article form.
At MBSC we initially started with salaried employees. I quickly realized the error of my ways during a Christmas vacation week.  I suddenly found that a few days before Christmas I was the only “trainer/ coach” in the gym. When I began to inquire where everyone was I was informed that all my salaried employees were home for the holidays. Here I was, the owner, and I was the only one training clients?
As I analyzed the situation it became obvious to me. Why should/ would employees work on these “off” weeks if they received the same paycheck when they didn't work? At that point I realized that salary was not going to work for me or for our business. I personally never cared about salary or hours.  I worked when I needed to work and when my athletes or clients wanted to train. For nearly twenty years I only took one week a year off to vacation with my wife.  I realized that my behavior was not normal and, that I should not/ could not expect my employees to do the same things I was doing.
I talked to my partner Bob and said “the only time I want to pay someone is when they are working”.  I wanted people working if we were paying them? Does that seem crazy?  I don't think so.
So now none of our trainers or coaches at MBSC are on salary.
What about classifying your workers independent contractors? I've seen a number of posts on this topic also. We do not have  any independent contractors at MBSC. After reviewing the independent contractor law in Massachusetts it was clear that anyone working for us was not an independent contractor. If you dictate programming and have any type of appearance requirements ( uniforms etc.) you have employees, not contractors. If you have company policies your expect people to abide by, you don't have contractors. I would caution you about treating your trainers or coaches as contractors as an audit can be costly. If the IRS was to determine that your “contractors” were in fact employees you could be facing significant back taxes and fines.
The bottom line for us is that we pay our employees by the hour. This gives us piece of mind and, then incentive to work. If you work long and hard, you can make really good money. There is no worry about people hanging around the facility drinking coffee and collecting a salary. If they are working, they are getting paid. If they aren't working they are off the clock.

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