Benefits And Benefits Of Employee Compensation

Decent Essays

Employee compensation is all forms of pay and rewards which are received by employees for completing their job duties as outlined by their employer. Compensation is classified two ways, direct and indirect compensation. Direct compensation covers wages and salaries, bonuses, commissions and incentives. With indirect compensation, benefits are supplied by employers, and nonfinancial compensation includes recognition, rewarding jobs, and flexible work hours in order to accommodate each person’s own needs. The psychological reward which employees received from their employer is a very important aspect. Employees aspire to have compensation systems that they believe to be fair and while being compensated for their skills. Due to the …show more content…

Fair Labor Standards Act (FLSA) is whether employees are exempt or nonexempt. Nonexempt employees must be paid at a rate of 1.5 times the regular pay rate of that employee for any time that was worked over forty hours in their work week. Employees that are not covered by the FLSA overtime laws are classified as exempt employees. Most supervisors and managers are considered exempt employees. About 86% of the workforce are covered by FLSA overtime laws and up to 70% of employers may be in violation of these rules as it can be complex at times to determine if the employee is exempt vs nonexempt. (Schreiber and Ariail) “The FLSA provides an exemption from overtime pay for those working as executive, administrative, professional, and computer employees when they are paid a salary not less than $455 per week.” (Meade) When comparing the benefits for hourly and salary positions, there are many different items to look at and it often depends on each person’s personal situation. One of the main benefits of hourly positions is that the work day is set. The employer sets expectations with the employee on what their work shift will be and at the end time, they can leave. If additional work time is needed, the employee has the opportunity to receive extra pay from overtime hours. Due to the extra cost of overtime, many employees do not allow hourly employees to work over their standard 40 hours. This allows the work-life balance for hourly employees

Get Access