Salaried Employee Teammate Management

[whitsintheweeds]

What is the point of having a "salary" option for team members if there is no option to set a flat weekly or annual rate of pay? I'm trying to setup our team features so that I can easily keep track of our labor costs, but because Square Team turns the salary into an hourly rate and this employees hours vary, the labor cost for this individual is inaccurate. I've tried to call and request assistance in working around this and was told my only option was to have someone from Square Support submit a feature request on my behalf. This seems more difficult than it needs to be. Am I missing something? Has anyone figured out a way to work around this?

[ryanwanner]

Hello @whitsintheweeds !

The definition of salary is basically a set pay rate over a week regardless of how many hours your salaried employee worked. When you set up the employee in the system, you can enter their annual pay rate. You then get the option to designate how many hours on average your employee will be working. It then figures the hourly rate from that.

How I set up hourly employees for factoring labor costs is this: say your store is open 6 days a week for 8 hours per day. That means that you are open 48 hours per week. If you pay your salaried employee $50,000 per year, that works out to $962 per week (with rounding), or $20.03 per each hour your store is open. Since they're salaried, they're technically "on the clock" every hour you're open, or $160.25 each day. Realistically, unless there are some trust issues with hours worked, there is no real reason for salaried employees to clock in daily. Note that if you are paying your salaried team below the US federally mandated minimum for salaried overtime, you will need to track hours still. From a quick Google search: "Under a two-step approach, effective July 1, 2024, the standard salary threshold for overtime exemptions will increase to $844 per week ($43,888 per year). Six months later, the minimum salary will jump to $1,128 per week ($58,656 per year)"

The way I learned business bookkeeping is that salaried staff are considered "uncontrollable costs" on your Profit and Loss statement: you're going to have that dollar amount hit your account regardless of what your sales look like. Other uncontrollables are things like rent, utilities, insurance, etc. There is nothing you can do to adjust that cost short of termination. Factor your salaried employees in as part of the overhead: it's going to cost you $xx/day to turn on the open sign. This way, you have a base number, then you can control the other costs (inventory, hourly labor, etc) to keep your budgets in line.

Incidentally, this is why salaried managers in the restaurant industry are given the nickname "Labor Savers." Keep the hourlies off the clock, and your labor dollar looks a lot better. Yeah, there are legalities about salaried employees doing hourly employees' work, but that's another topic for another day...

[whitsintheweeds]

Hi Ryan,

I appreciate your intent to help but unfortunately the feedback doesn't address the actual issue from the original post.

The problem is that Square requires that you submit a set number of hours the salaried employee will work and automatically turns that into an hourly rate; which leads to an inaccurate payroll/labor cost figure for the week. What I'm looking to accomplish is to have our Timecards accurately reflect the pay rate for the salaried individual(s) on our team. 

It is not an issue of trust, nor and issue of trying to control the cost, or of needing to create an hourly rate for said individual because they are below the federal salary requirements. Having salaried employees abstain from clocking in/out would not resolve the issue. It is a matter of wanting to easily (and accurately) monitor labor cost and hours day to day. This was possible when our team was made up entirely of hourly wage employees. I just cannot make sense of how to work around this for salaried individuals or why Square does not provide the option to program in a flat rate salary without an hourly breakdown.

[ryanwanner · Accepted solution]

@whitsintheweeds  Okay, maybe I was misunderstanding the intent of the original post.

Are you saying that Square isn't reporting the salaried wages correctly, or that if your salaried people are clocking in their rates aren't accurate because they're working more or less than the hours initially established when creating the salaried position?

For the inaccuracies, this is why I say don't worry about having them clock in. (Yeah, they're going to see the Clock in? dialog every time they use the system... that's something I've been leaning on the Teams dev team to fix for ages...). You already know exactly what their weekly rate is going to be: their salary divided by 52 weeks. Unlike hourlies that are paid by the hour worked, the salaries are paid a base amount.

If your salaried people clock in, when you pull a labor report it will not be fully accurate because it is looking at the salaried team at an hourly rate. This is a hole in the way labor is counted in Square, yes. I haven't been able to figure out a way to keep it accurate when the salaried people clock in. I suppose you could adjust their hours worked per week to be the hours your store is open, but if it's a day they're not clocked in you'll still see an inaccurate payroll report since technically they're on the clock at all times.

I definitely recommend keeping the salaried people off the timeclock. The mental gymnastics to account for when and if the employee is clocked in is just too much for me to handle. From my example, keep the $160 in your head as something you'll have to add to the reports each day. Or, better yet, round it to $200 to keep the math easier. If your hourlies have worked a total of $500 in hours in the day, math all your reports at $700. I'm right behind you if you lead the charge for better salaried staff reporting over in the Ideate feature request section of this forum, that's for sure!

[devneck]

Thanks for asking this question, I am just now trying to start using the Staff features which includes "Salaried" people for partner guaranteed payment in addition to employees who are hourly.

This question is applicable for scheduling as well as viewing timecards because if the salaried person works a different number of hours than specified in the Team setup then their cost changes. 

So now I'm concerned about how this might affect if I tried to use the Square Payroll to pay people as well. Would the people marked as Salary be paid based on the hours worked .. effectively making them hourly .. or do they actually only get paid the salary rate?

[ryanwanner]

Hello @devneck. Good question!

Salaried staff gets paid whatever their weekly breakdown of their annual salary is, regardless of how many hours worked in that week.

So if your salaried employee makes $52,000 a year, their payroll will show a $1000 payment weekly.

[devneck]

@ryanwanner - Thanks for the quick response!

That is good to know. 

I do think I still, unfortunately, have to do some stuff in excel though because while this response is a relief, the other side of it is scheduling and time tracking and being able to account for salaried and hourly persons in labor cost. 

It seems to me that the schedule should spread the salary across the entire week in 7 equal amounts, but also provide me the option to apply their salary only to the days they are scheduled. 

So for example, if I have a salaried person who makes $36,400/yr (for easy math) then that would be $700/week. The default labor cost in a given week should show me $100/day. This should also be true when viewing the labor cost totals for a given day .. regardless of if the salaried person worked or not. 

And then I should have the option to show the schedule by hours worked, in which case if the same salaried person is scheduled for 10 hours then it shows them making $70/hr for each hour. If they are scheduled for 70 hours, then $10/hr. Same thing for time tracking .. effectively reducing their hourly rate for each additional hour either scheduled or tracked in the time tracking system. 

I understand the concept of not requiring a salaried person to clock in and out. We probably are not going to do that anyways. But when watching our labor costs then we do need to account for salaried employees as well as owner guaranteed payments. Those are labor costs as well.