Human resources expert Catherine Mattice demonstrates how to classify employees as exempt or nonexempt, and the relationship between earning a salary or being paid by the hour hour. In this video tutorial she explains the difference between full-time and part-time work and how different pay structures are set up.
- "To be or not to be that is the question." That's from Shakespeare's Hamlet. In the case of HR, the question you must answer for all of your employees to be or not to be full-time, part-time, hourly, salaried, exempt, or non-exempt, so let's dig into the answers. The most obvious difference between full-time and part-time employees is hours. In most companies, a full-time employee works more than 32 hours per week, while a part-time employee works less than that. Now, let's look at an employee to understand how pay structure and overtime works with full and part-timers.
Let's say Nick is a Receptionist. Whether Nick is a part-time or full-time Receptionist, you can pay him an hourly rate or a salary, so how do you determine which way to pay him. Well, if Nick's hours were constantly pushing him into overtime and his duties meant that he's often staying an extra 15 minutes, hour, or a few hours later than his schedule, you'd be better off paying him hourly because you need him to punch a time-clock to correctly determine his overtime pay. If he regularly works the same hours all week, every week, you may decide a salary is easier because you don't have to deal with time cards and calculating hours worked.
No matter how you pay him, as a Receptionist, Nick's duties likely do not make him exempt from overtime pay, so whether you pay him on a salary basis or hourly and whether he's part-time or full-time, if Nick works over eight hours in a day, or over 40 hours in a week, he receives overtime pay, so there's a few misconceptions about salary I'd like to clear up. The first is that a salary automatically means exempt from overtime, but that's not how it works. Exempt or non-exempt status is determined by an employee's primary job duties, not by how their payroll is calculated.
Employees are only exempt from receiving overtime pay if they meet certain requirements put forward by the Fair Labor Standards Act or FLSA. The most common exemptions are administrative, executive, computer professionals, and outside sales employees. I've provided a job aid in the Exercise Files for this course to give you some ideas on what those exemptions entail. Nick doesn't meet the exemption requirements as a Receptionist, so no matter if he's paid on an hourly basis or on a salary, he gets overtime pay.
The second misconception is that salaried employees do not get their pay deducted if the leave early for the day. In Nick's case, because he's non-exempt, his salary should be deducted if he leaves early. Salary doesn't mean free pass to come and go as you please. Now let's fast forward 10 years, and say that Nick has worked his way to Director of Operations, Nick manages a few people, has a say in their employment at the company, and makes decisions that greatly impact the organization. Now, Nick's duties fit within the executive exemption.
In other words, his job duties make him exempt from overtime pay, so no matter how many hours he works in a week, he will not be paid overtime. Note that Nick will also be a salaried employee at this point because being salaried is one of the requirements for exemption per FLSA. Again, it's Nick's job duties that make him exempt, not the fact that he's salaried. In the end, according to the Society for Human Resources Management or SHRM, misclassifying employees is the number one mistake made in HR and there's so many rules around overtime that it's easy to get confused.
Download the job aid I provided to help you get started, but once you've classified your employees, it's a good idea to ask an employment law attorney to review you all of your job descriptions and the classification you assign them.
HR consultant Catherine Mattice outlines some of the considerations of the human resources professional, such as balancing the needs of employees with the interests of the organization. She reveals how to conduct an HR audit to identify HR practices that need improvement. She then outlines core HR responsibilities: staffing, training, documentation, compensation and benefits, performance reviews, job descriptions, compliance with state and federal regulations, and more.
- Building trust with employees
- Conducting an HR audit
- Classifying employees
- Setting up compensation and benefits
- Creating and enforcing company policies
- Writing job descriptions
- Recruiting, interviewing, and hiring new employees
- Managing employee performance
- Training employees
- Disciplining employees