Salaried employees made up 41.9% of the US workforce in 2019 according to data from the US Bureau of Labor Statistics.
This sizable presence underscores their importance in various aspects of employment management. Employers need a comprehensive understanding of their role to streamline payroll processing, determine overtime eligibility, administer benefits effectively, and manage overall labor costs.
So what are salaried employees? How are they different from hourly workers? And are they really better for your company? This article seeks to address these queries, offering insights into the benefits and distinctions of salaried employment.
This Article Covers:
- What is a Salaried Employee?
- How Does Salary Pay Work?
- How Many Hours Do Salaried Employees Work?
- Are Salaried Employees Entitled to Overtime Pay?
- Do Salaried Employees Get Work Benefits?
- Do Salaried Employees Get Paid If They Do Not Work?
- Should You Track Salaried Employee Time?
- What’s the Difference Between Salaried and Hourly Employees?
- Which Should You Hire: Salaried or Hourly Employees?
What is a Salaried Employee?
A salaried employee is someone who gets paid a fixed amount of money on a regular basis, regardless of the number of hours they work. This salary is predetermined and does not vary based on hours worked or performance, offering a consistent income. Salaried employees often hold positions that require a higher level of responsibility and expertise, such as managerial or professional roles.
How Does Salary Pay Work?
Salary pay works by providing employees with a set amount of money for their work, distributed in regular pay periods, such as weekly, biweekly, or monthly. This fixed salary covers all the work done within the pay period, regardless of the actual number of hours worked, and is outlined in the employment contract.
How Many Hours Do Salaried Employees Work?
Salaried employees typically work around 40 hours per week, which is considered a standard full-time work schedule. However, there isn’t a strict requirement for salaried employees to work exactly 40 hours per week under the Fair Labor Standards Act (FLSA). The actual hours that salaried employees work can vary depending on factors like job responsibilities and employer expectations.
Are Salaried Employees Entitled to Overtime Pay?
Salaried employees are typically not entitled to overtime pay unless they are classified as non-exempt under FLSA.
To be considered non-exempt by the FLSA and entitled to overtime pay, a salaried employee must meet the following criteria:
- Receive below the minimum salary threshold of $35,568 per year. It’s important to note that this threshold is going to be increased to $43,888 on July 1, 2024, with more scheduled increases in the following years.
- Have a primary job that doesn’t involve administrative, executive, and professional responsibilities.
- Not mainly involved in selling products, getting service orders, or arranging contracts for facility use where the client pays a fee (as defined by the FLSA).
Employers can refer to the FLSA for more detailed information on the overtime exemption criteria.
Do Salaried Employees Get Work Benefits?
Yes, salaried employees typically receive work benefits. These benefits often include health insurance, retirement plans, paid time off, and sometimes bonuses or profit-sharing. The specific benefits can vary by employer, but salaried positions generally come with a more comprehensive benefits package compared to hourly positions.
Can Salaried Employees Get Paid If They Do Not Work?
Yes, salaried employees typically get paid even if they do not work, as their pay is based on fulfilling their job duties rather than the number of hours worked. Usually, the only time you don’t have to pay a salaried employee is if they miss an entire workday (eight hours). But you can only deduct pay in full-day amounts.
Specific company policies and employment contracts may permit not paying employees if they don’t work. For instance, if a salaried employee takes personal leave, their pay might be adjusted unless they use paid time off (PTO) or vacation days.
Should You Track Salaried Employee Time?
Given that salaried employees are paid a fixed salary, some might think tracking their time is unnecessary. However, time tracking for salaried employees can provide valuable insights into productivity, project management, and workload distribution.
Time tracking can ensure that employees are not overworked, identify areas where efficiency can be improved, and ensure compliance with labor laws regarding overtime. Additionally, tracking time can aid in accurate project costing and budgeting, making it a beneficial practice for overall business management.
For more efficient and accurate time tracking, most employers have started looking to dedicated time tracking software that offers real-time data, seamless integration with other management systems, and user-friendly interfaces. These tools not only simplify the process of recording work hours but also generate detailed reports that can be used for performance reviews, payroll processing, and strategic planning.
What’s the Difference Between Salaried and Hourly Employees?
The main difference between salaried and hourly employees lies in how they are paid: hourly employees receive wages based on hours worked, while salaried employees receive a fixed salary regardless of hours worked.
There are also other distinctions between the two types of employees in terms of work schedules, job duties, benefits, and overtime eligibility. This table outlines the key differences between hourly and salaried employees, making it clear and easy to understand for both employers and employees.
| Employment Aspect | Salaried Employees | Hourly Employees |
| Pay Structure | Paid a fixed annual salary, usually divided into regular pay periods (weekly, bi-weekly, monthly) | Paid based on the number of hours worked |
| Pay Rate | Fixed amount regardless of hours worked | Hourly wage set for each hour worked based on applicable state and federal laws |
| Overtime Eligibility | Generally exempt from overtime pay; unless considered non-exempt by the FLSA | Typically eligible for overtime pay for hours worked over 40 in a week |
| Work Schedule | Usually work full-time with a more consistent schedule | Often have variable hours and may work part-time |
| Benefits | Usually eligible for benefits like health insurance, retirement plans, and paid time off | Not required to receive benefits |
| Job Duties | Often have managerial or professional roles | Typically perform specific tasks or roles, such as customer service, production, or construction with less autonomy and decision-making authority |
Which Should You Hire: Salaried or Hourly Employees?
Now that you know the differences between salaried and hourly employees, the big questions is: which of them should you hire? Well, whether you should hire salaried or hourly employees depends on your company’s specific needs and priorities.
Consider hiring salaried employees if:
- You need individuals to take on leadership or managerial roles, as salaried employees often have broader responsibilities.
- You require employees who can work flexible hours and are willing to go above and beyond to meet project deadlines or performance goals.
- You prefer a stable payroll structure and are willing to offer comprehensive benefits packages, such as health insurance and retirement plans.
Consider hiring hourly employees if:
- You need individuals to perform specific tasks or duties on a part-time or as-needed basis.
- You require flexibility in your workforce to accommodate fluctuating workloads or seasonal demands.
- You want to minimize labor costs by only paying for hours worked, including overtime if necessary.
Ultimately, the decision should align with your company’s budget, staffing requirements, and long-term goals.
Learn more about Salaried Employee Laws in our detailed guide.
