7 Employee Classification Types and How They Compare
Employee classifications identify employees who are exempt from requirements set by the Fair Labor Standards Act (FLSA) and determine the benefits they receive. You may have heard the terms “full-time” and “part-time” before, but there are even more employee classifications that involve jobs that offer varying compensation, duration and work hours.
When applying for jobs, paying attention to employment classification can guide you to the career that provides you the work-life balance and compensation you need. In this article, we explore a list of different employee classifications to help you decide which might be right for you.
Seven common employee classification types
Here are seven employee classifications you may encounter as you apply for jobs and advance your career:
Full-time employees work for a specified number of hours every week and are typically paid on a salary basis that does not change. They may also have access to benefits provided by the company, like healthcare coverage, 401(k) and paid time off that accrues over time.
The FLSA does not define the number of hours an employee must work to be considered full-time, which means employers decide how many hours constitute a full-time classification. However, the FLSA requires overtime for employees who work more than 40 hours per week.
Full-time employees are mostly exempt, but this might vary based on job duties. Common job duties for full-time positions include professional, executive, administrative, outside sales and some computer-related jobs. Full-time employees also qualify as exempt when their job duration is permanent and their salary is at least $35,568 annually. Due to being exempt, full-time employees are not eligible for FLSA benefits.
Related: What Is a Full-Time Exempt Employee?
Part-time employees usually work less than 30 hours per week and are paid hourly. Because part-time employees are paid for every hour they work, they know exactly how much their time is worth and can request certain hours or days to work. The nature of part-time positions also allows people to hold more than one at a time, so there is the opportunity to gain experience in multiple fields at once. Examples of part-time jobs include retail, food service, sales associates and warehouse workers.
Most part-time employees classify as "non-exempt" and qualify for FLSA benefits due to working hours and the fact that they earn less than $35,568 per year. As with full-time work, this depends on job duties and working hours set by employers, but part-time non-exempt employees are required to receive overtime pay for any time worked in a week that passes 40 hours.
Contract employees are hired for an established period of time outlined in a contract. The number of working hours for a contract employee may vary for each contract, but they are not limited to 40 hours per week. One benefit of working a contract position is knowing the exact duration of each job at the time you start. There is also sometimes the potential to renew a contract after being completed. Some contract jobs include sales, IT technicians and construction workers.
A contract employee included on their company's payroll is considered nonexempt and also qualifies for FLSA benefits. Although compensation for a single contract is normally less than $35,568 per year, there is the potential to complete multiple contracts in one year or more than one at a time.
4. Independent contractor
An independent contractor is an employee who works as a contract employee but is not on a company's payroll. The flexibility of being an independent contractor offers the freedom to build a unique schedule and complete projects at a pace that suits both employees and their employer. Independent contractor roles include freelance writers, rideshare drivers and food deliverers.
Because working hours are dependent on a contract but not limited to 40 hours per week and compensation varies in regard to job duties, length of a contract and the employer, independent contractors are neither exempt nor non-exempt. Therefore, independent contractors are not considered employees of a company, and FLSA benefits and company benefits are not always guaranteed.
A temporary employee is hired on a short-term basis, sometimes to cover a full-time employee who is absent for an extended period of time. Temporary positions are ideal for people who might be looking for extra work for a short period of time or have an interest in seasonal jobs during specific parts of the year. These jobs include seasonal retail workers, administrative assistants, housekeepers and performers.
Temporary workers are considered non-exempt because they primarily earn less than $35,568 per year and are paid hourly. This means that temporary workers are eligible for FLSA benefits even though they can work either full-time or part-time, depending on the position and the employer.
On-call workers are expected to be available to work at specified hours during the day but might not perform job duties during all work hours. They are expected to be on-premises for their entire shift or readily contactable if the position is remote, regardless of if they are called in. Some on-call job titles include caregivers, public safety or security officers and customer service representatives.
On-call workers are non-exempt as they are paid hourly and often make less than $35,568 per year. Therefore, on-call workers are eligible for FLSA benefits like overtime even though they sometimes have the choice of working full-time or part-time.
Volunteer positions vary in time commitment and do not usually offer compensation. These positions can help build a resume and gain experience in the field of your choice. Many volunteer positions also have flexible schedules that allow you to work when you can. Some examples of volunteer roles are internships, animal care volunteers and volunteers who work at organizations or charities.
Volunteer work is neither non-exempt nor exempt because volunteers are typically not paid for their time. A volunteer position is also less than 35 hours per week and temporary at the discretion of the volunteer and company.
Exempt vs. non-exempt
The most important distinction that employee classifications make is whether employees are exempt or non-exempt. An employee's status as exempt can be determined by three tests:
Salary basis test: This verifies that an employee is being paid a fixed amount per week that does not change based on hours worked.
Salary level test: This test ensures that an employee is being paid at least $684 per week.
Job duties test: This specifies that an employee performs job duties that qualify for an exemption, such as professional, executive and administrative jobs.
Exempt employees and non-exempt employees encounter different pay periods, overtime requirements and job duties, but each classification has its own advantages:
What is an exempt employee?
An exempt employee is someone who is not granted benefits like minimum wage and overtime pay by the FLSA but can receive benefits from their specific company, like healthcare, paid time off and a 401(k). Exempt employees have the following characteristics:
Paid on a salary basis that stays consistent regardless of hours worked or work completed
Earns at least $684 per week
Has job duties that are executive, professional, administrative or as an outside sales employee
What is a non-exempt employee?
A non-exempt employee is someone eligible for FLSA benefits as well as company-specific policies, such as working from home and flexible work hours. Non-exempt employees' working hours per day or week are not limited by the FLSA, nor are their potential hours of overtime. Here are some other characteristics of these employees:
Paid on an hourly basis unless classified as salaried non-exempt
Earns less than $684 per week
Works hours that are not limited by the FLSA
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