In hiring employees, one of the first decisions that employers need to make is whether or they will hire employees who will be paid by the hour or who will be salaried employees. Classifying employees as being hourly or salaried goes beyond merely picking A or B. An employee’s work classification bears weight in terms of certain standards and protections. As we will find out below, there are differences between a salaried employee and an hourly employee that are important for both employers and employees alike.
What is a salaried employee?
When an individual is a salaried employee, this means that the employee receives a regular, fixed amount of pay or compensation, called a “salary,” from their employer. The pay period may vary, from monthly, weekly, or bi-weekly, depending on the arrangement with the employer.
What’s unique about being a salaried employee is that that compensation remains the same regardless of how many hours the salaried employee works in a pay period. For example, most companies consider 40-hours as a full-time workweek. Salaried employees may work more than 40 hours or even less than 40 hours. They will still receive the same compensation.
Usually, salaried employees are qualified as exempt employees. Being an exempt employee is significant because of certain laws and guidelines set under the Fair Labor Standards Act (FLSA). According to the FLSA, exempt employees are not entitled to minimum wage and overtime pay.
In terms of compensation, exempt employees are those who are paid at least $684 fixed salary per week or $35,568 per year. Additionally, they must also perform specific job duties defined by the FLSA.
Are salaried employees required to keep a timesheet?
When it comes to clocking in at work and keeping a timesheet, there is generally no need for salaried employees to do so. Of course, they can do it if they want to. Unlike hourly employees whose compensation depends on the number of hours that they work, salaried employees receive predetermined, regular compensation regardless of the hours they put into work. For this reason, salaried employees do not keep a timesheet of their work hours.
Additionally, employers do not take away their pay if salaried employees work less than 40 hours a week. Similarly, salaried employees can work more than 40 hours per week. Since most salaried employees typically qualify as exempt employees, they are not paid for overtime hours.
However, if salaried employees take personal time off that is not for sickness or disability, then the time off work may be taken from their available vacation days or personal time. Aside from this, there are also other situations when employers can deduct from a salaried employee’s pay. In case of safety violations done such as smoking in a prohibited area or ignoring safety rules, employers can deduct from their pay. Doing so must be according to company policy and must not violate federal or state law.
Do all salaried employees fall under exempt employees?
While most salaried employees qualify as exempt employees, the answer is no. Just because a person is a salaried employee does not automatically make them an exempt employee. An individual can be salaried by still considered non-exempt. These are for lower salary positions still entitled to overtime pay according to state and federal laws.
What are the benefits of being a salaried employee?
As previously mentioned, salaried employees receive a regular paycheck. The amount is fixed and predetermined. Because they know how much and when they will receive each pay period, this provides a sense of security. It also allows salaried employees to better plan their finances and budget. Aside from a regular paycheck, positions that qualify as salaried and exempt are perceived as more professional by many. If a salaried employee is exploring career opportunities, a professional job title will look impressive on a resume and can be more eye-catching. Finally, salaried employees also commonly qualify for employee benefits such as paid time off, retirement plans, and other employer-sponsored benefits.
What are the possible drawbacks of being a salaried employee?
Employers often expect salaried employees to finish their job duties even if it means working beyond 40 hours a week. The primary drawback of being a salaried exempt employee is that they are not paid for overtime hours. While this may not pose a disadvantage if working overtime happens only once in a while, not being paid for overtime work hours can be difficult if it happens frequently or every day. Also, working overtime hours often may pose problems in maintaining a work-life balance. For example, if salaried employees work during weekends often, this may lead to burnout or employee dissatisfaction.
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