There are hundreds of millions of full-time and part-time workers in the US. Some employees are exempt, meaning they don’t qualify for the minimum wage or receive overtime pay, and they generally earn a salary. They do, however, often earn more than what they’d take home if they made minimum wage and worked a 40-hour week.
On the flip side, many employees are non-exempt. These workers usually earn an hourly wage and can receive one and a half times their regular hourly wage for working over 40 hours in any seven-day week.
It can be tempting for a business on a budget to pay its workers on a salaried basis (rather than hourly), due to that fact that salaried employees can work long hours without being paid overtime. But improperly classifying workers can lead to much greater expenses down the line, like overtime penalties and wage disputes.
- Outside of that, to correctly run payroll you want to make sure you have a grasp on all the differences. Let’s take a look at exempt vs. non-exempt employees, and what it means to you and your business.