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.