What Are The Pros and Cons of Hiring Exempt Employees?
What Are The Pros and Cons of Hiring Exempt Employees?
The term "salaried" is usually associated with the upper echelon of white-collar workers, with their corner offices, high salaries and bonuses, and unlimited vacation time. While this may be accurate for some, exempt employees are often hardworking professionals who perform essential roles and functions in your organization.
In this article, we'll go over what an exempt employee is and the pros and cons of hiring exempt employees so that you can make the best decision for your company's needs.
What Are Exempt Employees?
The main difference between exempt and non-exempt employees is that, as a rule, exempt employees are paid a salary instead of an hourly wage. Exempt employees are also expected to follow their own schedules without needing to fill out timesheets or track their tasks on spreadsheets. Exempt employees are not eligible for overtime pay, and they also don't qualify for many of the benefits given to non-exempt employees, such as health and dental benefits.
However, there are some drawbacks: since they are not eligible for overtime pay or benefits like sick leave or health insurance coverage, you may have higher overhead costs as well as increased risk down the road if an employee gets injured on duty but does not have any income coming in during their recovery period.
How Many Hours Do Exempt Employees Work Weekly?
Exempt employees are expected to work a minimum of 40 hours per week, but they can work more if they choose. They are not paid overtime for this extra time (more on that later). As an example, most full-time, exempt employees work at least 45 hours per week and often much more than that. This is because the company is paying them a salary rather than hourly wages, and they're expected to complete all the tasks associated with their job without additional compensation.
Pros of Hiring an Exempt Employee
There are some clear advantages to hiring an exempt employee. These professionals will typically work more hours and have more experience than non-exempt employees. Exempt employees are also more likely to produce at a higher level, be loyal and stable in their employment, flexible with scheduling, and independent enough to come up with solutions on their own. Because of this, many employers consider exempt hires as being worth the cost.
Some other benefits of hiring exempt employees are as follows:
- You won't need to pay them overtime for working additional hours
- You won't need to pay for expensive benefits, insurance, or other such costs
- You won't need to worry about keeping track of their hours worked or timesheets
- You can expect exempt employees to be more loyal and committed to your company
Cons of Hiring an Exempt Employee
It is also important to be aware of the potential downsides of hiring an exempt employee. Exempt employees are typically more expensive to hire and maintain than non-exempt employees. In addition, they are harder to manage, harder to fire and replace, and harder to keep motivated.
Some other downsides of hiring exempt employees are as follows:
- You will need to pay them whether they are at work or not
- You will need to provide them with more vacation days than non-exempt workers
- You will need to pay them their regular salary during their vacation time
- You can't expect them to be as subservient as non-exempt workers
In theory, these pros and cons should balance out so that there isn't much of a difference between the two types of employees; but clearly, this isn't the case in practice because most companies tend toward using non-exempt workers for all but high-level positions.
Which Employees are Generally Exempt?
In terms of which specific employees are exempt, it often depends on the country in question. In Singapore, you can expect to find a number of different employees who are commonly exempt from overtime and rest period requirements.
These employees often include people who work in an office and whose work is managerial or professional in nature (including doctors and lawyers), as well as executives, administrators, and managers. Employees who work in a factory or workshop and whose work is supervisory or technical in nature. Employees who do not have an employment contract that specifies the number of hours they must work per day or week, and employees who earn more than $1,800 per month.
That said, some of these employees may be hired into non-exempt roles, and there are also additional employees who are sometimes hired as exempt. It really all depends on the organization in question, and what their business needs are when hiring the employee.
The answer to the question, “Should I hire exempt employees?” isn’t always cut and dried. Non-exempt workers are generally a less expensive option, but they are entitled to overtime pay if they work more than 40 hours in a week. However, hiring exempt employees allows employers to save money on benefits and avoid the hassle of tracking employee hours.
In addition, exempt employees provide more flexibility for employers because their jobs aren't limited by hourly or weekly restrictions. Finally, some industries favor hiring salaried workers over hourly ones due to their higher skillsets or ability to handle complex tasks independently with little supervision. Ultimately, it comes down to what kind of business you run and how much time and money you want to devote toward managing employee schedules.