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Classifying Employees Incorrectly – Hourly VS Salary and the common Mistakes

It is important to keep records to avoid large settlements against your company for improper tracking and or improper classification of hourly, Salary and W-2 employees.

Hourly non-Exempt VS Salary Exempt.

Non-exempt employees are workers that are covered under the FSLA. That means that you must pay these employees at least minimum wage for the number of hours they work. You must also provide overtime pay that is at least time-and-a-half for hours they worked beyond the 40-hour workweek.

Non-exempt employees are almost always hourly.

In contrast, salaried employees are usually considered exempt employees. According to the Department of Labor, this means that they are exempt from the FSLA requirements regarding overtime pay and in many states, require a different or larger minimum wage.

In theory, you should compensate your salaried employees enough that issues of 40-hour work weeks and overtime pay become moot—they are required to fulfill their job duties, and their salary makes it worthwhile.


It is important to make sure that time keeping for employees is accurate to avoid costly mistakes or expensive and time-consuming litigation.

To Exempt or Not Exempt?

The nature of your business and the types of jobs you provide will answer the question of whether your employees are nonexempt or exempt. Knowing the differences between the two, and why it is important to follow the rules for both will keep your company in compliance and out of trouble.


Navigating the nonexempt worker landscape can be complex. But a solution like Hourly is your secret weapon. Take advantage of our time tracking software to automate and simplify your timekeeping for employees and managers alike.

HR Simplistic can help you set up a simple accurate time keeping system for your business.


Contact Us for more information.

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