Employee Classifications

Misclassifying employees can be a costly mistake when tax time rolls around.

Employee classifications determine who is eligible for benefits and exactly what benefits you must provide, such as overtime pay and workers’ compensation.

Taking into account the distinctions between salaried and hourly payment structures, here’s a  list of employee classifications that includes these categories alongside other common types of employment statuses:

Full-Time Employees:

  • Salaried: These employees receive a fixed annual income, distributed across the year in regular pay periods, regardless of the exact number of hours worked.
  • Hourly: Full-time employees who are paid based on the actual hours worked. They may be eligible for overtime pay if they work more than the standard full-time hours.

Part-Time Employees:

  • Salaried: Less common, these part-time employees receive a fixed income but for fewer hours than a typical full-time role, without the expectation of overtime pay for additional hours worked.
  • Hourly: These employees work fewer hours than full-time employees and are paid based on the hours they work, with potential overtime pay according to labor laws.

Temporary Employees: Workers hired for a specific duration, often through staffing agencies, and can be paid hourly or receive a salary for the duration of their contract.

Seasonal Employees: Individuals employed for peak periods, such as holiday seasons, and can be paid on an hourly basis or receive a fixed salary for the season.

Contract Employees (Independent Contractors): Professionals contracted to perform specific tasks or projects, typically paid on a project basis or hourly rate, and not considered company employees.

Interns: Students or trainees who might work for experience, college credit, or a small stipend/salary. The structure of their compensation can vary widely.

Consultants: Experts providing professional advice or services, usually on a contract basis, and can be compensated on a project, hourly, or retainer basis.

Casual Employees: Workers without guaranteed hours, working irregularly, and usually paid an hourly rate for times they are called to work.

Remote Employees:

  • Salaried: Remote workers receiving a fixed income regardless of location, similar to traditional salaried employees.
  • Hourly: Remote employees paid based on the hours they work, which can include eligibility for overtime.

Exempt and Non-Exempt Employees:

  • Exempt (Typically Salaried): Employees who are exempt from overtime pay requirements under labor laws, usually because of their job duties and salary level.
  • Non-Exempt (Often Hourly): Employees eligible for overtime pay, typically paid on an hourly basis and covered by labor law protections regarding overtime and minimum wage.

These classifications offer a broad overview, but specific definitions and the applicability of labor laws may vary by country and local jurisdiction.