Paying employees fairly and correctly is crucial to having a successful business. We often receive questions from employers about whether a position should be salaried or paid hourly. Here’s how to determine if a position should be filled by a salaried or hourly employee:
Exempt or Nonexempt
One of the most common misconceptions about employee pay is that if an employee is paid a salary, they are automatically exempt from overtime pay. This is not true. The Fair Labor Standards Act (FLSA) sets forth specific requirements for an employee to be exempt from overtime pay. Being paid a certain salary is just one of the requirements. Using the worksheet below can help you determine if a position is eligible to be exempt from overtime pay.
Download the Worksheet
Tracking Employee Hours
Hourly employees always need to have their hours tracked to ensure they receive the right pay, but when would you need to track a salaried employee’s hours? There are several reasons why you’d need to track a salaried employee’s hours. These reasons include knowing how long projects take to complete, tracking jobs that are billed by the hour, and encouraging work-life balance. If you choose to track salaried employees’ hours, make sure to give them the reasons so they understand why they’re being tracked.
Full Time or Part Time
Is the position you’re trying to fill part or full time? How many hours an employee works can affect if they are salaried or hourly. For example, hourly employees are easier to have work part time because they only get paid for the work they do. Salaried employees on the other hand, make a set amount of money regardless of the hours they work. Because of that, you likely want your salaried employees to work full time.
Questions about employee pay are common. It is better to ask questions than assume you know the answers as the laws are complicated and change often. Reach out to Helpside if you have any questions about correctly paying your employees.