What’s the Big Deal About Salaried vs. Hourly Work?
Why do organizations have to spend so much time figuring out if they should pay specific staff members as salaried, or exempt, vs. hourly, or non-exempt employees? If you are leading a company that doesn’t think this is a big deal, think again.
Why does this matter? Legal issues around classification of jobs, which if not addressed properly can cost a company or non-profit organization a lot of money. The Federal Fair Labor Standards Act (FLSA), which was originally enacted in 1938 and has had many amendments added to it over the decades was created by Congress to provide workers with minimum wage and overtime protection. The FLSA established the 40 hour work week as being standard, after which employees are entitled to overtime pay. The FLSA also established protections for child labor, indicating that those under 16 years old were banned from working in most industries.
In states like California where state regulations, specifically the California Wage Orders, are more narrow than the FLSA, employers need to follow their state statues instead of just the FLSA. In California, hourly workers must be paid overtime for working more than eight hours in one day and/or 40 hours in one week. They must also be given required rest and meal periods. There are many nuances to the laws in California regarding hourly workers in particular, and some vary by industry.
The California Wage Orders outline specific categories of work which point to determining which types of positions need to be paid salaried vs. hourly, and the point of this blog is not to get into the weeds with this whole topic. Suffice it to say, if you are leading an organization and you have not retained qualified legal counsel to ensure your jobs are correctly classified as exempt or non-exempt, I highly recommend you do so.
Running afoul of wage and hour issues in California, for instance, can cost a lot of money and time to resolve. Making sure you are on the right side of all of the relevant employment laws and regulations is what smart, prudent employers do.
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