An employee’s salary is an important component of job satisfaction. There are a number of factors in determining a competitive salary. Check out this month’s employer tips for the next time you’re determining employee salaries.
When determining your employees’ salaries, first consider whether they are exempt or non-exempt. Exempt employees are paid a salary rather than an hourly wage, and are not afforded certain protections or regulations created by the Fair Labor Standards Act (FLSA). In addition, the FLSA has determined that exempt employees earn a minimum weekly income of no less than $455. Non-exempt employees are required to be paid at least minimum wage, given time and a half for overtime, and often receive paid breaks.
The most recognizable differentiation is whether employees are full-time, part-time, intern or student, and independent contractors. Full-time employees usually work about 40 hours a week with benefits such as insurance and PTO, while part-time employees are not afforded the same benefits and work less hours. Students and interns generally work for experience rather than money, and independent contractors provide a good or service under a certain agreement. They are typically not considered actual employees since they work on a more case-by-case basis.
In addition to the cost of living, where your business operates dictates many of the rules and regulations when it comes to salaries. For example, many states differ in their required minimum hourly wage for employees, and some may even detain a minimum weekly salary for salaried exempt employees. Certain cities may have local ordinances that set minimum wage higher than the state, or they are required to pay employees a living wage- that is a salary that a family of four could feasibly live on.
Factors such as industry, skills sets, and experience will determine the final wage. First, compare wages of similar jobs at comparable businesses to get an idea for the baseline salary range. From there, take into account potential new hires’ education, professional experience, and performance reviews. If these factors meet or exceed expectations, potential new hires may fall on the higher end of the pay scale, while those without must experience or do not meet expectations would fall at the low end of the pay scale.