Compensation is one of the key components to ensuring partnership and collaboration among providers and staff. Employee compensation must be fair and equitable, include defined principles and a consistent methodology. Over the past few years, practices of all sizes have begun to move away from grade-based structures and more towards a flexible, market-based model where each job is priced according to its value in the current market. 

Determining Pay Structure: Hourly Versus Salary

In pediatric practices, employees fall into 1 of 2 categories. 

  1. Hourly personnel: Those who are paid by the hour and who must receive overtime pay. In a pediatric practice, hourly staff typically include front desk staff, billing staff, medical assistants,  licensed practical nurses and some registered nurses. 
  2. Salaried personnel: Those who are paid a flat salary regardless of hours worked per week. These include administrators and managers (including nurse managers), employed physicians, mid-level providers (eg, physician assistants, nurse practitioners), registered certified medical technologists, and some registered nurses. 

Hourly personnel must receive overtime pay for all overtime worked. This is usually 1½ times usual wages for every hour worked more than 40 in a period of 7 consecutive days. Salaried personnel are exempt from the Fair Labor Standards Act (FLSA) requirements and do not need calculation of overtime. 

How to Determine if a Staff Member Should Be Classified as Salaried/Exempt? 

Most office personnel in a small pediatric office should be classified as hourly personnel, but there are some exceptions. To be overtime exempt, the employee must be at least one of the following: 

  • An executive employee, such as a practice administrator or nurse supervisor. These individuals perform management work such as "supervising other employees of the employer; interviewing, selecting and training employees; setting and adjusting their pay rates and work hours; directing their work; conducting employee performance appraisals; handling employee complaints and grievances; and disciplining employees. It also includes other functions, such as planning the work; determining the merchandise to be bought, stocked and sold; planning and controlling the budget; and monitoring or implementing legal compliance measures." 
  • An administrative employee such as an office manager or a payroll supervisor. This individual "has authority to formulate, affect, interpret or implement management policies or operating practices; has the authority to waive or deviate from established policies or procedures without prior approval; has authority to negotiate and bind the company on significant matters; and provides consultation or expert advice to management." 
  • A professional employeesuch as a physician, nurse practitioner or physician assistant. These individuals have university degrees and use "advanced knowledge to analyze, interpret or make deductions from varying facts or circumstances." 
  • Certain types of computer/information technology (IT) personnel

Please note that it is the type/kind of work done, not the job title, that determines whether a position is overtime exempt. Calling a front desk staff by a “fancy” title such as a Patient Reception Executive does not change the FLSA obligation. 

The US Department of Labor decision tool helps determine an employee's eligibility for overtime exemption and explains the common exemptions in more detail. 

What if Hourly Employee Agrees to Be Paid on a Flat Salary for Simplicity's Sake? 

While this would do away with a lot of painstaking record keeping, hourly employees cannot waive their hourly status, even if the employee and the company mutually agree on it in writing. Employees can sue their employers for back wages, and the employer can be fined for not keeping records of hours worked or not calculating overtime pay properly.​ 

What About Employees Who Do Exempt and Non-exempt Work? 

Some of this depends on what the employee's primary duty is, and for how long. Be aware, however, that exempt employees who do a non-trivial amount of non-exempt work in a given period may be entitled to overtime pay during that period. For example, if your receptionist (a non-exempt position) is on vacation for a week and your office manager (an exempt position) fills in, your office manager should be considered hourly for that week and should get overtime pay (if applicable). 

What About My State's Laws? 

Your state may have stricter laws about employee classification, hours worked, and the computation of overtime. Check your state's Department of Labor information


When  hiring staff, practices need to consider what benefits will be offered to staff. Several options include health insurance, life insurance, dental insurance, tuition reimbursement, paid time off and continuing medical education. Consider checking with colleagues in the area to see what they offer their employees to get an idea of what your potential staff might expect. 

Additional Resources

Last Updated



American Academy of Pediatrics