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Does he work 40 hours/week or 60? Does he have paid vacation & holidays, retirement, health ins. etc.? As far as raises go, unless he's gained new skills, increased his production levels or taken on new responsibilities (or he was previously underpaid), a mere COLA seems fine. Having said that I believe a person's pay level has to be in line with simply supply and demand. If a person of his skill level etc. can easily make more elsewhere, beware, you might loose him. So pay more if it you can't afford to lose him. On the flip side, if there are alot of prospects out there able and willing to do his job for less, you may be overpaying him.
And, oh yeah, can you afford him? Normally an employee making $42K w/bonus would really be costing you at least $52-55K once you add in worker's comp., unemployment, your 1/2 of SS and Medicare, etc. If you grossing $300K and you've got 2-3 other employees, equipment, fuel, materials .... the real question may be are YOU getting paid enough. Sit down and figure out how much you're paid per hour for everything you do all year (including doing this) and see who gets more per hour.
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