So you decided to hire an employee? Made sure you know what’s the difference between a contractor and an employee? That’s awesome. But then not all employees are the same. Unfortunately, you will have to get through a but more jargon first.
Full time
According to the IRS, a full time employee is somebody who works on average at least 30 hours per week or 130 hours per month.
It’s important to ensure you classify employees correctly, as the law provides additional protections to the full time employees and requires various benefits to be provided, such as paid time off. As an organization, you also need to be cognizant of how many full time employees you have, as it impacts some company-wide requirements, such as provisions of the Affordable Care Act or Family and Medical Leave Act.
Part time
This one is easy: if your employee doesn’t meet the hours of service threshold, they are part time.
Just because there are fewer legal obligations towards a part-time employee than a full-time employee, it doesn’t mean there are none. Make sure to check specific requirements in your jurisdiction. One of the first ones to take a look at: what are PTO requirements? These laws vary widely between jurisdictions, so make sure you follow them.
Seasonal
Seasonal employee is somebody who works in a position created to meet organization’s short-term (per IRS: less than 6 months) needs, such as Santa and his Elves at a mall or lifeguards at your neighborhood pool. A seasonal employee may be full- or part-time.
Usually, seasonal employees are part-time and not entitled to benefits (double check that for your specific situation though – I remember working for housing department 40 hours a week in the summer back in college and being entitled to some days off).
Exempt
Exempt employee is exempt from minimum wage requirements. He/ she earns a salary and is not eligible for overtime pay. This is one of Department of Labor’s touchy points, so you need to be careful to classify your employees correctly.
In 2024, an exempt employee has to earn at least $844 per week or $43,888 per year. Starting January 1, 2025, these numbers will go up to $1,1128 per week and $58,656 per year.
Basis of exemption:
- Executive exemption
- Regularly supervises at least two full-time or four part-time employees.
- Responsible for management of at least part of the business.
- Play an important role in job status of other employees, such as hiring, firing and task delegation.
- Administrative exemption
- Office or Non-Manual Work: Perform office or non-manual tasks directly related to the management of the organization and its business operations or customers.
- Independent Judgment: Exercise significant independent judgment and discretion on important business decisions, without needing to report to another person.
- Professional exemption
- Specialized Knowledge: Perform duties requiring advanced knowledge gained through specialized education, and exercise discretion and judgment in their role.
- Educational Qualifications: Possess a college degree or higher educational credentials in their specific field.
- Creative Professional Exemption: Work in a creative or artistic field, using originality, talent, imagination, and inventiveness to perform their job duties.
- Computer exemption
- Role Requirements: Fulfill the criteria for exemption while performing a computer-related role, involving tasks directly related to computer systems or software.
- Highly compensated employees
- Salary Requirement: Have office or non-manual job responsibilities and earn at least the minimum salary set for highly compensated employees under the FLSA. As of 2024, the salary minimum to be considered HCE is $132,964 per year, at least $844 per week of which must be either on a salary or fee basis. As of January 1, 2025, these numbers will go up to $151,164 and $1,128, respectively.
- Exempt Duties: Perform at least one duty that qualifies them as an exempt administrative, professional, or executive employee.
- Outside sales exemption
- Primary Duty: Focus primarily on making sales or securing contracts or orders.
- Work Location: Conduct their sales activities outside of the employer’s business premises.
Non-exempt
Well, this one is easy: any employee that doesn’t meet any of the exemption requirements.