Hourly Wages vs. Salary: Key Differences for Assisted Living
Sep 06, 2024
This blog will tackle an important topic for everyone who manages an assisted living facility: deciding between hourly rates and salary for your employees. This decision is more than statistics; it is about establishing your facility's work environment and culture. Understanding the implications of each payment system will help you create a more efficient, supportive, and motivated workforce.
Choosing between hourly wages and salaries has broad implications for the employees and your facility's operations. Hourly rates can provide flexibility for part-time workers and those with irregular schedules, and many employees enjoy the opportunity for overtime pay. On the other hand, paying a salary can establish stability and dedication in your full-time staff, resulting in a more cohesive and dedicated workforce. However, careful planning is necessary to ensure task balance and clear expectations.
Lastly, the decision affects your facility's productivity, employee satisfaction, and stability. By weighing the advantages and disadvantages of hourly wages against salaries, you can make an informed decision that aligns with your operational goals and the needs of your employees. Join us as we talk about this important aspect of assisted living management, offering insights and tools to help you make an informed decision.
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Defining Hourly Wages and Salary
Hourly Wages: Employees are compensated according to the number of hours they work. For example, if an individual works ten hours at $20 per hour, they will make $200. Hourly workers typically work about 40 hours each week. Overtime pay, which is normally 1.5 times the standard rate, begins after the standard 40 hours on a given week, and most employers in the assisted living industry pay double time for working during a holiday.
Salary: Salaried employees are paid a predetermined annual wage, such as $52,000, which translates into a steady weekly pay of $1,000 regardless of how many hours they work. This means that salaried employees can work more than 40 hours in some weeks and fewer hours in others, but their pay remains consistent regardless of the number of hours worked.
Key Differences Between Hourly and Salary Pay
Payment Consistency
Hourly workers' pay varies according to the number of hours they work every week, making it difficult to accurately anticipate monthly revenue and budget. Salaried employees, on the other hand, are paid in defined amounts at regular periods, such as monthly or biweekly. This regularity enables paid employees to better organize their money and budget for recurring costs. It can also create a sense of financial security in contrast to hourly workers' shifting incomes.
Overtime Eligibility
Hourly employees, are often allowed overtime pay when they work more than 40 hours in a given week. Overtime compensation is commonly computed at 1.5 times the regular hourly wage. Salaried employees, on the other hand, are not usually eligible for overtime pay. However, some businesses may have agreements in place to provide additional money or time off to salaried employees who work overtime.
Job Roles
Hourly Positions: Hourly jobs are often appropriate for shift workers, such as caregivers and cleaning personnel. These occupations frequently include delivering direct care or services, which may necessitate scheduling flexibility.
Salaried Positions: Salaried positions are ideal for management roles such as facility managers and assistant administrators. These occupations typically require greater experience and may have obligations that go beyond normal working hours, such as overseeing operations and taking on leadership roles.
Benefits and Job Security
Hourly Employees: Hourly employees usually work on an hourly basis and may have less job security than salaried employees. Because of the nature of their work, they may be more willing to change jobs for slightly increased greater pay.
Salaried Employees: Salaried employees generally have more job security and less defined roles. A salaried employee in the assisted living industry will appreciate the financial security, which will help you retain them as important team members.
Also, by offering comprehensive benefits, regardless of pay type, companies can attract and retain skilled and dedicated salaried employees, contributing to a productive and stable workforce.
Deciding Between Hourly and Salary for Your Staff
Role and Responsibilities
When establishing a wage structure, it is important to consider the nature of the work. Because of their work, caregivers and cleaning personnel are often better suited to an hourly wage. Administrative roles, such as administrators and other positions with major responsibilities, are often better suited to salaried income due to the amount of accountability and extent of their obligations.
Employee Needs
Different employees have different preferences for their pay system. Some people value the flexibility of being paid on an hourly basis, particularly the chance for overtime income. On the other hand, some people enjoy the stability and added advantages that come with being paid a set income.
Facility Needs
Assessing your facility's specific needs and financial status is essential for good management. By carefully assessing all of this, you can make informed decisions about staffing and financial investments that will benefit your institution in the long run. Fully staffing your facilities may decrease overtime expenses and guarantee that all important jobs are completed, whereas providing competitive benefits and wages can help keep talented employees and maintain excellent service standards. This technique can ultimately improve your facility's overall success and efficiency.
Final Thoughts
To ensure that your assisted living facility runs smoothly, you must carefully select the most appropriate compensation plan for your personnel. Striking a balance between addressing your employees' needs and aligning with your company's financial and operational requirements is important for long-term success.
If you need help building a solid business plan to launch your assisted living business, download our Business Plan Checklist for a comprehensive guide to developing a successful business plan for your assisted living facility. This resource will help you outline your goals, strategies, and necessary steps to build a thriving business.
Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
Show full transcript 👇
Transcript
00:00:00
hey friend it's Brandon Gustafson with Assisted Living investing excited to have you here with me on the channel today our topic for today's video is going to be getting into the difference between hourly wages and salary for your staff at an assisted living facility if you're interested in learning more about that stick around for today's [Music] video hey friend it's Brandon Guston I own and operate two assisted living facilities and I created this channel to help people just like you learn the ins
00:00:32
and outs of investing in assisted living facilities welcome to Assisted Living investing I want to before I get into the topic of today I want to remind you to get over to the website Assisted Living investing. netal we'll link it down below so you can go get access to that free resource to help you along your investment Journey our topic for today's video is going to be getting into hourly wages versus salary for the staff of your residential assisted living facility which one works best
00:01:00
when should you use one over the other which one is most beneficial when you should use hourly wages versus salary which type of staff and how that's going to work best for you so let's get into that in today's video all right let's define the terms first of all uh hourly wages versus salary so hourly wages is basically you are paying somebody for the amount of hours that they are working at the facility so if they are there for 10 hours and they make $20 an hour then you are paying them 10 * 20 so
00:01:28
you're giving them $200 for for their time while they're at the facility typically with an hourly person they're going to be working around that 40-hour Mark that's kind of what the standard is here in the United States for a a working time and if they go above that you're going to be paying overtime which could be 1 and a half% and you may even consider on holidays doing double time so if you're paying somebody $20 an hour and they're working overtime and that's
00:01:54
one and a half you're going to be at $30 an hour um for that time where they work the overtime so you kind of want to be aware of how that's going to work how it's going to impact you and also quick tip here why you would want to make sure that you are fully staffed the more fully staffed you are the less overtime that is worked and that's just going to reduce the cost that you have because then you're not paying people time and a half some of your staff really want to work that extra overtime they count on
00:02:20
it we've actually had people quit our facilities because we are fully staffed and they wanted the overtime um so weirdly enough that can happen salary what is salary so it it's you have a base amount so call it $50,000 a year um you are paying that person let's make the math easy $52,000 a year um you're paying that person $552,000 a year that is $1,000 per week regardless of how many hours they work typically with salary you are working until the job gets done and you're you're getting
00:02:50
through that process and you might have to work 50 60 hours in one week and some weeks you might be working 35 but regardless of how many hours you work you're getting paid paid that salary and so you know that's kind of the pros and cons and and how those two different things work now let's let's get into some of the key differences here on how this is going to work so your payment consistency we talked about this a little bit but hourly um you're going to typically they're getting paid for the
00:03:17
amount of hours that they worked and you're paying them on a regular basis you know typically every other week it's going to fluctuate based off of the amount of hours that they work salary you're going to also pay them on that same schedule but they know exactly how much money and it is steady they know exactly how much money they're going to be receiving as they go through that process next is overtime eligibility so those that work hourly and we touched on this previously as well they are going
00:03:41
to qualify for overtime and you can decide how you want to do this as a business typically though people are getting paid one and a half um times for overtime that's very common here in this industry and and just kind of in in the economy as a whole uh salary on the other hand does not qualify for overtime though if you wanted to you could s set that up with your payroll vendor um and setting up salary plus overtime you can offer that if you would like to um we don't but it is something that you could
00:04:09
do if you'd like to um and and how you want to set that up and how people qualify for overtime next is job roles and this is probably the most important piece of it with hourly you're probably going to be looking at the caregivers or the the cleaning staff the people that are of there to provide the cares to the residents and and help out um there and they are there for you know a shi and they go there whereas the salary is going to be something that's more for management um something like your
00:04:35
facility administrator maybe an assistant administrator depending on how you set that up um you're going to want to structure that uh the operator could also be getting a salary depending on how you want to structure that but your the way that you're doing that with your salary is um these people are they've got to get their job done and regardless of how long it's going to take them it could again be 35 to 60 hours somewhere in that range but they're going to go in they're going to get the work done and
00:05:02
then they're going to go and they're going to get paid a salary they're going to be level on that now what you're going to see here though with that is typically your people that are making a salary are going to be higher quite a bit higher than those that are that are getting paid hourly they're doing things that uh require a little bit more expertise they require a little bit more management um type style of things they're making decisions they're uh doing strategy kind of helping to really
00:05:29
help the business run and and make the business money and and that type of stuff and so you you want to make sure that you are fairly compensating those people that are on salary to keep them happy so they stay at the facility and can help you through the process there the next is going to be benefits and job security so uh as you get into this typically with hourly um people um you're going to see there there's less job security from them but also they are not as consistent or reliable um to be
00:05:58
honest they are you know they will very easily go to the next job that might pay them an extra 50 cents an hour because they're going to work the same amount of work and get paid a little bit more for it and in their minds they want that and so they might do that and so um you just kind of have to be careful there and and make sure your wages are competitive so that you can keep your staff and keep them all happy whereas your salary typically they're going to be a little bit more committed to you because you're
00:06:25
giving them a good amount of pay and you might be offering them benefits as well um now different states have different rules and things like that in Colorado we actually offer a retirement um and and PTO and then um for our administrator we offer health insurance benefits um for that for that individual in Idaho we um offer PTO to our staff um the retirement that we offer in Colorado is actually a state-based um program that is run through the state and and we just kind of facilitate it um but you
00:06:54
want to look at these different types of benefits and see you know which one hourly do they get any benefit benefits if so which ones they get salary same thing which benefits do they get and what are you giving to those people to help um kind of endear them to you and help them be happy about their decision to work with you at your facility so all that said which of these structures is the right one for you when you're running your own facility and I think there's a few different questions that
00:07:22
you should be asking yourself as you're trying to figure out um how much money you should be paying and what type of staff that you want to be having number one is going to be the specific role what role is this person going to be are they going to be a caregiver are they going to be your administrator and you know how do you want to adjust that with those individuals that's really the key one in my mind for what role are you going to do and then how is that going to dictate the amount of money and the
00:07:49
type of pay that they are getting paid next is the level of responsibility so if you've got a caregiver that has progressed to a Medtech and now they're up to being your assistant administrator then you might want to consider changing them over to salary or giving them bumps and pay or things like that because they are adding more value they're they're doing more they're having more responsibilities for the facility that's going to help generate revenue for the facility and helping you be more
00:08:18
successful in reaching your investment goals as well and the last one is going to be just kind of considering the needs of the employee and the employer and what do they need at a given time some people really I mentioned this before some people want to be that hourly wage they want to have the flexibility to work that they want to be able to have the opportunity to get overtime so they can get some extra money um especially during the holidays and things like that so it's something that you need to have
00:08:43
that conversation with people and see what their financial situation is and kind of move forward with it from there here in Assisted Living you are a business owner and and as part of that you've got to have some of these hard conversations you are responsible for the livelihood of your residents but also of your staff and you've got to help them through the process and and help all of these people and it you know it can be stressful it can be hard to go through that process but you can figure
00:09:09
it out you're going to you're going to be successful with it uh I'm interested to hear um how those of you that own own a facility which of these methods are you doing with your staff do you have a mix between hourly wages and salary uh do you only do hourly um you know how how are you structuring your assisted living facilities you go in and operate it and how is it working for you and what are some of the hiccups that you're finding and you know what what's some feedback that you would like and I'd be
00:09:38
happy to uh kind of give you some guidance on what I found in running my own assisted living facilities if you found this video to be helpful make sure you like it uh subscribe and ring the bell and get notified every time we get on here on the channel we're doing lives once a week we've got the long form videos and we're here just providing incredible value to you the more you comment the more information I'm going to get on creating more valuable videos and information for you as you go
00:10:03
through the process if you are interested in learning more and working with me a little bit get over to the website Assisted Living investing. netal we'll put a link down below where you can get access to our free underwriting calculator it's going to help you out on your investment Journey as well does residential Assisted Living sound interesting to you but you just don't know where to get started at Assisted Living investing we're here to help you through the process start to finish
00:10:24
thanks for watching and have a great day [Music]
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