Hourly pay is the rate paid per hour of work. Employees who are paid by the hour are eligible for overtime pay equal to their base wage plus 50%. A salary is a specific amount of compensation regardless of the number of hours worked. Employees who are paid a salary are not eligible for overtime pay.

The Fair Labor Standards Act (FLSA) governs which type of payment an employee receives.

Key Takeaways

• Salaried employees receive a fixed wage but they must keep up with their responsibilities and complete necessary tasks in a given timeframe even if that means working extra hours without compensation.
• Hourly employees must be paid time and a half for any hours worked over 40 worked during a week.1
• The Fair Labor Standards Act determines whether U.S. employees can be paid a salary or must be paid hourly.
• Exempt employees are not entitled to overtime.

Salaried vs. Hourly Pay: An Overview

An employee generally has to earn at least $684 per week or $35,568 per year, be paid on a salary basis, and perform exempt duties that require discretion and independent judgment at least 50% of the time to be considered exempt. You’re probably exempt if you take on managerial duties. You can be paid a salary so your employer doesn’t have to pay you overtime wages no matter how many hours you work.2

You can’t negotiate whether your job is exempt or nonexempt because of the terms of the FLSA. The duties you perform determine your job category regardless of your job title.3

How Does a Salary...

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