Experience Files

Fire Damage, PPE, and Profit: Getting Your Labor Rates Right

The question constantly surfaces in industry groups: "Should I bill for HMR, WTR, or CLN labor rates for fire damage, and should I be billing for mold-type PPE and full-face respirators?" Let's break down these critical components of your business.

Understanding Labor Rates for Profitability

First, labor rates. In most markets, a cleaning technician (CLN) might bill at under $30.00 per hour, a water restoration technician (WTR) at $40-45.00 per hour, and a hazardous material remediation technician (HMR) at over $55.00 per hour. The critical question is: can you truly be profitable at $30.00 per hour for complex restoration work? The resounding answer is almost always no.

Many business owners mistakenly believe that if they pay their production staff $12-15 per hour, the remaining $15-18 profit margin per hour will cover expenses and taxes. This thinking often leads to just breaking even, or worse. As a general rule of thumb, take your hourly employee's wage and multiply it by two to get a rough idea of your break-even point after taxes, benefits, and insurance. However, this doesn't cover operational overhead. To cover all company bills and provide a return for your sacrifice and investment as an owner, aim to multiply their hourly rate by three. This "rule of three" is a far more realistic baseline for sustainable profitability.

The Non-Negotiable Necessity of PPE

Now, regarding the implications of wearing (or not wearing) PPE on fire damage projects: the answer is a resounding YES, you must bill for it, and your employees must wear it. Countless studies prove the carcinogenic nature of smoke, not just for lungs but for skin as well.

The financial burden of purchasing proper PPE does not excuse you, as a business owner or manager, from providing the safety equipment required to do the job properly. You wouldn't send a roofer onto a roof without fall protection, would you? Deep down, you know that if they fall and are seriously injured or die, you'll face an investigation and likely heavy fines from OSHA.

Please understand that a willful violation of an OSHA statute—meaning you knowingly put an employee's health and safety in peril—carries a minimum fine of $75,000. While OSHA's funding does not directly come from fines, they are a federal agency tasked with enforcing worker safety. They will investigate, and they will look at social media. If it's discovered that you've participated in discussions in private groups where you demonstrate knowledge of safety requirements but choose to ignore them, it can and will be used against you.

Make your arguments for appropriate compensation to the insurance company solid. Get your client on your side by explaining the importance of safety measures for their family and home. Most importantly, protect your employees' health and safety, regardless of whether you win every billing argument.