Hourly Wage for Employees
Hourly employees are compensated at a specified hourly rate, which is multiplied by the number of hours they work during the specified pay period. For example, if an employee has an hourly rate of $10.50 per hour and works 40 hours in a given week, their pay for that period would be 40 × 10.50 or $420.
All hourly employees, except those working in exempt roles from overtime pay provisions, are classified as non-exempt under the Fair Labor Standards Act (FLSA) guidelines. Non-exempt employees are not exempt from overtime pay. They must be paid time and a half for each hour worked over 40 hours in a specified week.
For example, if the same employee works 50 hours in a week, their compensation would be 40 × 10.50 for the 40 regular hours plus 10 × 15.75 for the 10 overtime hours.
Note: A specific number of hours of work per week is often not guaranteed for hourly employees unless covered by a work contract. An hourly employee’s weekly hours can vary based on their weekly schedule. Sometimes, employees have a schedule that changes every week, so their working hours may differ from week to week. These employees must be paid at least the minimum wage.
Note: Employers must pay the higher of the state or federal minimum wage for hourly employees.
Monthly Wage for Employees
Salaried employees receive a predetermined annual income level as a minimum. This annual amount is divided by the number of pay periods to determine their weekly, bi-weekly, or monthly salary.
For example, if a salaried employee earns $50,000 paid weekly, each paycheck would be $961.54 before deductions. If the employee is exempt from overtime pay requirements, this amount does not change regardless of the number of hours worked in a week.
Exempt Salaried Employees
Many salaried employees are considered exempt. This means they are exempt from the overtime rules specified in the Fair Labor Standards Act.
For this reason, employers generally do not track the number of hours salaried employees work or compensate them for overtime hours.
Some employers provide overtime pay to their salaried employees. Alternatively, instead of overtime pay, employers may offer their salaried employees compensatory time off or other types of benefits instead of overtime pay.
Some positions are considered exempt from overtime provisions even if they are paid on an hourly basis.
Non-Exempt Salaried Employees
If a salaried employee is classified as a non-exempt worker under the Fair Labor Standards Act, the employer must pay that employee time and a half for each hour worked over 40 hours in a specified week.
Starting from January 1, 2020, salaried employees must be classified as non-exempt if they earn less than $684 per week or $35,568 per year, or if they do not meet the Department of Labor criteria for exempt status.
Overtime Rules in States
There are some states that have enacted overtime rules that expand workers’ eligibility for overtime pay, so check with your state’s Department of Labor to verify your eligibility in your location.
Note: If you work in a state with overtime regulations, overtime pay is made according to the standard that will provide the higher pay amount.
How to Calculate Your Salary
Whether you are an hourly or salaried employee, you can use a salary calculator to determine the amount you will receive in each paycheck. Salary calculators consider the amount you earn for taxes, including FICA.
This means
FICA is the federal insurance coverage. Your paycheck will include a deduction for FICA, which goes to cover Social Security and Medicare programs.
Note: A paycheck calculator is a useful way to get a realistic idea of the amount you will take home. There are many online calculators you can use to estimate your paycheck amount.
It is also helpful to ensure that your employer is withholding the correct amount from your paycheck.
Salary vs. Hourly Wage: Pros and Cons
Benefits of Salaried Jobs
There are benefits to both salaried and hourly jobs. Salaried positions often provide more benefits, including health insurance, maternity leave, and 401(k) plans.
Some salaried jobs come with more responsibility and influence compared to hourly positions, which can be a positive if you are looking to advance in your career. Additionally, some people enjoy the stability of knowing they will receive the same amount in their paycheck each month.
However, there are also downsides to salaried employment. For example, because you aren’t paid overtime, any extra work you do does not come with additional pay.
Benefits of Hourly Jobs
The benefits of hourly jobs are that you can sometimes earn more than you would in a salaried position, especially if you work a lot of overtime hours. You also know you will be compensated for every hour you work, unlike a salaried job.
However, hourly positions do not always have the same benefits available as salaried positions. Also, if you work on a variable schedule, you might have more hours one week than another, which will affect how much you earn each week.
Consider these pros and cons when deciding between a salaried job and an hourly job. For instance, take into account how important health insurance and other benefits are to you.
FAQ
How do employers decide if a job is hourly or salaried?
If the job is non-exempt (not exempt from the Fair Labor Standards Act (FLSA) requirements), federal minimum wage must be paid for all hours worked, and time and a half for each hour worked over 40 hours in a work week. Salaries can be paid to some exempt employees from minimum wage and overtime requirements.
Is it better to be an hourly or salaried employee?
There are benefits to each type of employment. Hourly employees have the opportunity to earn extra pay. Salaried employees may have a higher pay rate or a more robust employee benefits package.
Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we fact-check and maintain the accuracy, reliability, and quality of our content.
U.S. Department of Labor. “Overtime.”
U.S. Department of Labor. “Salaried and Overtime Pay Exemptions under the Fair Labor Standards Act.”
NCSL. “State Minimum Wages.”
U.S. Department of Labor. “Fact Sheet #17G: Salary Requirements and Exemptions Under the Fair Labor Standards Act (FLSA).”
U.S. Department of Labor. “Executive, Administrative, Professional, Computer, and Outside Sales Exemptions Under the Fair Labor Standards Act.”
U.S. Department of Labor. “Exemptions.”
NCLS. “Overtime and Work Breaks and Wage and Hour Violations.”
U.S. Department of Labor. “When is Overtime Paid?”
Social Security. “What is FICA?”
Source: https://www.thebalancemoney.com/hourly-vs-salary-employees-2063373
.lwrp .lwrp-title{
}.lwrp .lwrp-description{
}
.lwrp .lwrp-list-container{
}
.lwrp .lwrp-list-multi-container{
display: flex;
}
.lwrp .lwrp-list-double{
width: 48%;
}
.lwrp .lwrp-list-triple{
width: 32%;
}
.lwrp .lwrp-list-row-container{
display: flex;
justify-content: space-between;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
width: calc(12% – 20px);
}
.lwrp .lwrp-list-item:not(.lwrp-no-posts-message-item){
}
.lwrp .lwrp-list-item img{
max-width: 100%;
height: auto;
object-fit: cover;
aspect-ratio: 1 / 1;
}
.lwrp .lwrp-list-item.lwrp-empty-list-item{
background: initial !important;
}
.lwrp .lwrp-list-item .lwrp-list-link .lwrp-list-link-title-text,
.lwrp .lwrp-list-item .lwrp-list-no-posts-message{
}@media screen and (max-width: 480px) {
.lwrp.link-whisper-related-posts{
“`css
}
.lwrp .lwrp-title{
}.lwrp .lwrp-description{
}
.lwrp .lwrp-list-multi-container{
flex-direction: column;
}
.lwrp .lwrp-list-multi-container ul.lwrp-list{
margin-top: 0px;
margin-bottom: 0px;
padding-top: 0px;
padding-bottom: 0px;
}
.lwrp .lwrp-list-double,
.lwrp .lwrp-list-triple{
width: 100%;
}
.lwrp .lwrp-list-row-container{
justify-content: initial;
flex-direction: column;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
width: 100%;
}
.lwrp .lwrp-list-item:not(.lwrp-no-posts-message-item){
}
.lwrp .lwrp-list-item .lwrp-list-link .lwrp-list-link-title-text,
.lwrp .lwrp-list-item .lwrp-list-no-posts-message{
“`
};
}
Leave a Reply