Pros and Cons of Part-Time Exempt Employees
From time to time, organizations want to hire employees for exempt positions on a part-time basis. Or an organization may agree to allow a full-time exempt employee to work part time in the same job. Questions then arise about the best way to pay the part-time exempt employee.
The first step in this process is to write, or review, the current job description and then verify that the job qualifies as exempt-classified under the salary basis and duties tests of the Fair Labor Standards Act (FLSA). The part-time exempt employee may be paid on either an hourly or a salaried basis. There are advantages and disadvantages to both the employer and employee with both approaches. Employers should consider the following:
Part-Time Exempt-Classified - Paid Salaried
Advantages
- Cost remains the same, pay period to pay period.
- If more hours are worked, there is no additional pay due.
- Income for the employee remains the same, pay period to pay period.
- Employee may be less likely to feel any difference with flexibility with a continued salaried approach if he/she is moving from a full-time schedule to a part-time schedule.
Disadvantages
- If fewer than the agreed-upon number of hours are worked (as a result of workload fluctuation, absence, etc.), pay remains the same.
- Employee must receive their full part-time salary for any week in which any amount of work is performed.
Part-Time Exempt-Classified – Paid Hourly
Advantages
- The employer pays only for the hours the employee works.
- If the workload varies from week to week, the employer has the ability to pay less for fewer hours of work.
- Employee may enjoy getting paid hour for hour for his/her work.
Disadvantages
- Costs can vary pay period to pay period.
- Income may fluctuate for the employee.
- Employee will need to keep track of all hours worked.
- If an employee works more than 40 hours, there may be an expectation that the employer pay additional compensation for that time. Because the compensation is paid hourly, rather than on a guaranteed salary basis, the FLSA salary basis test has not been met and therefore the employee could be subject to overtime rules. Note: the computer exemption salary basis is one exception where hourly pay is allowed.
Before making changes, employers should review these considerations when making the decision whether to pay a part-time employee in an exempt position on a salaried or hourly basis. Situations should be evaluated on a case-by-case basis to determine the best solution.
