Best Practices for Paying Interim Employees Correctly
Imagine this: A key player has left your company without a permanent replacement. What do you do?
How to Pay Interim Employees: Exempt and Non-Exempt
A common solution is to assign interim responsibilities to an existing employee, whether exempt or non-exempt. But do you know how to compensate interim employees correctly?
Taking on interim roles or positions generally includes taking on additional responsibilities. Because of this, many employers have enacted guidelines regarding compensation for these employees.
When assigning interim roles to employees, it’s essential to understand the classification of their current position under the Fair Labor Standards Act (FLSA) for proper compensation and compliance with labor laws.
This article explores the guidelines for paying interim employees, including exempt and nonexempt employees. We’ve also included a comprehensive FAQ section at the bottom with more information.
Defining Interim Roles
Let’s begin with the basics: An interim role is a temporary assignment where an employee steps into a vacant position or newly created position to help maintain business continuity.
This often occurs when a company is between hires, undergoing restructuring, or dealing with an extended leave of absence and in need of a temporary employee.
It depends on the situation, but interim roles and interim job duties can involve taking on some—or all—of the responsibilities of this job. It often entails a higher-level position or involves projects that require specific expertise.
Unlike temp or contract work, interim roles are usually filled by someone already on the team and aren’t meant to be permanent.
Common Situations that Call for Interim Staff and Pay
Interim pay is typically offered when an employee takes on responsibilities that extend beyond their current job scope and current position.
Here are some common scenarios that call for interim workers and assignments:
- Someone in a leadership or similar role resigns
- Parental, medical, or sabbatical leaves
- Company restructuring
- Departmental transitions
- Sudden organizational needs that require filling a gap temporarily
Offering pay to interim staff helps acknowledge the additional job duties and encourages performance during the transition.
Documenting Interim Agreements
You’ll want to take steps to prevent misunderstandings and maintain clarity. Among the most important steps you can take is formally documenting interim assignments.
This documentation should include:
- The start and expected end date of the interim role
- The title of the interim position and a description of the responsibilities and job duties
- Any compensation changes, additional compensation such as bonuses or temporary salary increases during that period of time
- How and when performance will be evaluated
Having this in writing helps protect both the employer and the employee and keeps everyone on the same page regarding expectations.
Exempt Guidelines
Several methods can be used to compensate an exempt employee taking on an interim position.
One of the most common is a one-time payment or bonus for the extra work created by new job duties.
Alternatively, you might consider adjusting the employees’ pay for the time they will be in an interim role. This is supplemental pay.
When an employee takes on additional responsibilities similar to their current role, the pay increase should reflect the level of expanded duties.
A moderate increase of responsibilities has a standard 3-5% increase while a substantial increase of responsibilities finds an appropriate increase of 10-15%.
Non-Exempt Guidelines
Non-exempt employees have an hourly rate and pay—whether the employee is salaried or not.
If a non-exempt employee accepts an interim role, work with the human resources or compensation department to determine the appropriate modification to that employee’s pay.
Once the interim role ends or a permanent replacement is found, your employee’s salary returns to its original amount, plus any bonuses or increases warranted during their time as an interim employee.
How Symmetry Helps
Whether you're adjusting compensation for exempt staff or modifying rates for non-exempt employees, accuracy and compliance matter every step of the way.
Symmetry Software offers a suite of tools designed to streamline the interim payroll process, payroll taxes and ensure compliance with wage laws, and simplify documentation for HR and regular payroll cycles.
Get a Symmetry demo to learn how our solutions can support your team through transitions—an additional position or otherwise.
Frequently Asked Questions
Below, you’ll find more questions and answers on the topic of how to pay interim employees.
How does interim payroll work?
Interim pay is a temporary compensation adjustment offered to professional employees who step into a new role on a short-term basis—usually to fill a leadership or higher-responsibility position while a permanent employee is found.
This pay can come in the form of a percentage increase to the employee’s current salary, a flat-regular rate bonus, or a temporary shift to the salary range of the new interim role. The arrangement should be clearly defined and time-bound.
How do I get an interim payment?
To receive an interim payment, you’ll typically need to go through your company’s HR or payroll department. The interim role and corresponding pay should be documented in an internal memo or formal agreement.
This documentation should outline the start and end dates, new responsibilities, any changes in compensation or hourly rate, and whether additional bonuses apply. Interim pay usually begins once management officially accepts and approves the interim duties that the temporary position entails.
How to pay temporary workers?
There are different ways to pay temporary workers, and the right way comes down to their classification:
- Temporary workers hired as W-2 employees: Paid through payroll with taxes withheld.
- Temporary workers classified as a 1099 independent contractor: Paid directly without tax withholdings and responsible for their tax obligations.
Pay schedules vary—weekly salary, biweekly, or per project—and should be established in a contract before the additional duties begins. Be sure to comply with local and federal wage laws, regardless of the arrangement.
Don’t miss this article about location accuracy in payroll next.
Should you get paid more for an interim position?
In most cases, yes. Taking on an interim position often means extra duties, more accountability, or managing other employees.
While some companies don’t have a formal policy requiring additional pay, many offer a salary bump, bonus, or supplemental compensation to recognize the extra hours or added workload.
When an interim role stretches over several months or involves leadership duties, it’s a good time to reassess pay to help support morale and job performance.
How do I determine if an interim worker should be a W-2 employee or a 1099 contractor?
This mostly comes down to control. Does the company control when, where, and how the work is performed, and do they use company tools or work under direct supervision? Then, they’re likely a W-2 employee.
Alternatively, if the worker sets their hours, uses their equipment, and provides services to multiple clients, they may be a 1099 contractor.
Because misclassification can have legal and financial consequences, it’s wise to check with HR or legal before making that call.
What are the risks if I misclassify an interim employee as an independent contractor?
Misclassifying a temporary worker can have profound consequences for the organization:
Tax liabilities: The IRS can hold the organization liable for unpaid employment tax amounts, including Health Insurance like Social Security and Medicare contributions, along with income tax withholding.
Fines and Wages: The U.S. Department of Labor can impose fines, require backpay for minimum wage and overtime violations resulting from misclassifications.
Misclassified interim employees can file a lawsuit for unpaid wages and benefits. Additionally, misclassification may lead to a loss of trust among employees with permanent roles.
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