There are two types of employees in any workplace: exempt and non-exempt. An exempt employee refers to a person who receives the same pay regardless of how many hours they work. Meanwhile, non-exempt employees are those who are entitled to overtime pay. There are plenty of legislative acts that regulate who can work overtime and how much employers need to pay people who work extra. In general, an employer must pay one and a half time the regular pay. But let’s see which one wins in the non exempt vs exempt employees battle.
Non Exempt vs Exempt Employees
- The Salary
In general, exempt employees are regarded with a salary instead of hourly wages. Moreover, they are compensated for the specific projects they complete, not the time it takes them to complete them. Such a worker needs to make a minimum of $23,600 a year. The best part for the employee is that they don’t have to worry about losing money if they don’t work a specific amount of hours.
Being compensated for the job you do, and not the time it takes you, means that you can have a more flexible work environment in comparison to a non-exempt employee. As an employer, you are interested in your worker completing the job rather than counting their hours. This means you don’t have to keep an eye on how long are they staying on their lunch break, whether they come in early or work remotely.
Here, things are exactly the opposite: workers are compensated for the time they spend at work, and not on the jobs they fulfill. Consequently, if they manage to work more than 40 hours a week, they will get extra money. As previously mentioned, they should receive one time and a half the normal hourly wage, plus half that wage, whenever they work overtime. The result is that the worker can make much more money if he/she agrees to do overtime.
Unlike salaried employees, a non-exempt employee is compensated for every hour of work they put in. Two employees, one exempt and the other not, may find themselves working the same number of hours in a week. However, they might end up getting different types of payments, which can be to the exempt worker’s disadvantage. The interesting thing here is that a salaried employee can calculate and reach an incredibly low amount per hour. Meanwhile, a non-exempt worker knows how much an hour of his work is worth.
Which one should you choose between non exempt vs exempt employees? It’s hard to give a universal answer since this depends on the business field you work in. Ideally, you should also consult with your employees and see which option would make them happier. Lastly, do the math and find out which version is more convenient for your finances. Naturally, this may fluctuate over time, but it will give you an idea of how you should manage your business.
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