Contractors and Employees ContractorsOvertime Compensation ExemptionsExempt vs. Non-Exempt StatusExempt employeesNon-exempt employeesTemporary employees Temporary Employees
Contractors are self-employed individuals or companies that are hired to perform a specific job or service for a company. They are not employees of the company and are not entitled to receive employee benefits or protections, such as workers' compensation or unemployment insurance. Contractors are responsible for paying their own taxes and are typically paid a fixed fee or by the project.
For founders only: specific details on worker classification guidelines and payment terms for contractors are here.
In the US, employees are classified into two categories, exempt and non-exempt, based on the overtime pay and minimum wage laws, which can also vary by state. The primary difference between these two categories is how they are compensated for their work.
Most OCV company employees during the first 18 months will likely have exempt status. Founders should pay attention to any admin hires like Executive Assistants (EAs).
Exempt employees are those who are exempt from the overtime pay and minimum wage laws. They are typically salaried employees who are paid a fixed amount regardless of the number of hours worked. Exempt employees are not entitled to receive overtime pay when they work more than 40 hours a week.
Common examples of exempt employees include executives, professionals, and administrative employees. Employers are not required to keep track of their hours worked or pay them overtime.
Non-exempt employees are those who are covered by the overtime pay and minimum wage laws. They are typically hourly employees who are paid for the actual number of hours worked. Non-exempt employees are entitled to receive overtime pay at a rate of 1.5 times their regular pay rate for any hours worked beyond 40 hours per week or 8 hours per day, depending on the state.
Common examples of non-exempt employees include hourly workers, clerks, and non-managerial employees. Employers are required to keep track of their hours worked and pay them overtime.
The exempt or non-exempt status of an employee is important because it affects their entitlement to overtime pay and minimum wage. Understanding the difference between these two categories can help employers ensure that they are complying with labor laws and treating their employees fairly. It can also help employees understand their rights and what they are entitled to under the law.
In the US, temporary employees are hired by a company for a finite period of time, often to fill in for absent employees or to meet short-term business needs. They are typically paid by the hour and are entitled to overtime pay if they work more than 8 hours a day or 40 hours a week depending on the state