Salary Versus Hourly Employees: A Brief Overview

A common misconception about compensation is that non-exempt workers must be paid hourly. This is not the case; employers have quite a bit of discretion in that area, which raises a couple of issues. First, from the company point of view, is it preferable to pay hourly or establish a salary for positions that could go either way? Second, from the job seeker’s point of view, am I be better off being a salaried or hourly employee?

There are a number of things to consider. The infographic below, Salary Versus Hourly Employees: A Brief Overview, presents a summary of the key issues for employers and employees. It’s definitely worth a close look. Depending on the situation, the decision of whether to go with a salary or hourly wage can have a substantial effect on not only overall payroll expense and earnings, but also administrative costs, operational flexibility, morale, job satisfaction and a host of personal lifestyle issues.

The infographic will help prevent employers and employees from jumping to conclusions, which is easy enough to do whenever compensation decisions are pending. For instance, a job seeker might be tempted to accept what appears to be a generous salary but fail to consider the average workload is upwards of 60 hours a week. Or, a company might set up a particular position as hourly because it’s a standard practice in the field, without taking into account how a salary structure could reduce administrative costs enough to create a major competitive advantage. To explore the possibilities, read on.

Nathan S. Gibson is an independent worker compliance business partner who provides expertise and creative solutions to enhance workforce flexibility and maintain compliance with worker classification requirements. He helps mitigate the risks associated with the misclassification of self-employed consultants, freelancers and independent contractors.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.