As your company grows, the types of employees you will have on your payroll will more than likely change. It’s not uncommon for a growing company to have a mix of both exempt salaried employees and non-exempt hourly employees. If you are the person in charge of processing this hybrid payroll, you will need to put several tools and precautions in place to make sure that your paychecks are accurate every time.
The key differences between exempt and non-exempt
As defined by the Department of Labor, certain types of employees are exempt from overtime and minimum wage provisions outlined in the Fair Labor Standards Act. These employees include, but are not limited to, such positions as commissioned outside sales staff and professionals who were paid a salary of at least $23,600 in 2012. If an employee is classified as exempt, his employer will not have to pay him overtime if he works more than 40 hours per week or more than eight hours a day.
If an employee is designated as non-exempt, the employer must pay the employee a rate that is at least one and half times his regular wage for each hour that he works overtime. For further information about exempt or non-exempt status, see the Department of Labor’s eLaws website.
An employer’s responsibilities
The managers in your company must be aware of which of their employees are exempt or non-exempt and assign work accordingly. It is especially important that a manager refrain from assigning an employee overtime if your company is on a tight budget and paying overtime will adversely affect your bottom line. Refusing to pay a non-exempt employee for overtime work that he has performed is not an option and can lead to serious fines against your company.
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In order for your company to pay its employees correctly, it is important to accurately track their hours. While some companies rely on handwritten timesheets or timecards, it is best to use more accurate time clocks or online time management systems that can verify that a non-exempt employee is actually working the hours that he is claiming.
As your payroll gets more complicated, it may be time to turn to a professional payroll service company. Companies that specialize in human resources tasks and software understand complicated issues like processing payroll for exempt and non-exempt employees, and often, software is available to help you manage your payroll needs. Time-tracking software, for example, can be helpful in keeping exempt and non-exempt employees’ payroll information organized.
Taking care of business
When you work in human resources, nothing will lead employees to your office faster than a botched paycheck, which is why many HR professionals have agonized over checking and double-checking payroll to prevent mistakes. But processing payroll that includes both exempt and non-exempt employees can be confusing and time-consuming, so it is important to take the steps to ensure paychecks are accurate. Getting help from a company that understands payroll processing can make your job easier.