Brent M. Giddens
Carlton DiSante & Freudenberger LLP

How should an employer determine whether an employee is to be paid hourly or a set salary?

When you hire your first employee or any employee it is important to carefully consider whether you will be paying them on a salary basis that is a set amount by the week or whether you will be paying them by the hour. Unfortunately the law does not allow you to pick and choose whether to pay someone a salary or whether to pay someone by the hour. There are only a very few number of employees or job positions that really are properly classified as salary. The vast majority or at least many many jobs really are and must be paid on an hourly basis. It's tempting to pay somebody on a salary basis from the beginning because it's much easier. You don't have to keep track of their hours, you don't have to have to have a time clock or time card and I realize that can often be a big hassle particularly in a startup company. However jobs like receptionist, or secretaries or administrative clerks, jobs along those lines very clearly need to be paid on an hourly basis. You do not have the option of paying them a salary and f you do pay them a salary and they are working overtime you may well be subject to penalties from the various state wage and hour enforcement agencies. When you do hire somebody by the hour there are various rules that need to be complied with such as keeping careful track of hours worked and many states providing meals and rest breaks and so you need to pay careful attention when you hire somebody what is the job you are hiring them to perform and is appropriate to pay them on a salary basis or by the hour.