Laws on Work Hours for Salaried Employees

While paid time off isn’t a mandated benefit for salaried employees, companies often provide paid time off as part of their compensation package. This can include vacation days, sick leave, and holidays, although the specific amount may vary depending on company policies and individual employment agreements. Time tracking can ensure that employees are not overworked, identify areas where efficiency can be improved, and ensure compliance with labor laws regarding overtime.

What’s the Difference Between Salaried and Hourly Employees?

Check with your state department of labor for the current overtime provisions in your area. 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. A salaried employee, also known as a salaried worker, is paid a fixed amount per payroll cycle. This amount is typically established as an annual salary (e.g., $70,000 per year) at the time of hiring or during the performance review process.

However, they could also be expected to stay late or take work home without extra pay. If you were charging a per-hour rate, you would have been paid extra for those overtime hours. However, you wouldn’t charge for the hours you weren’t actively working, and you likely wouldn’t receive the same benefits.

Usually, the only time you don’t have to pay a salaried employee is if they miss an entire workday (eight hours). An employee is salaried nonexempt if they do not fulfill the FLSA job duties test, even though they earn a salary. For example, a salaried administrative worker who does not perform the administrative duties outlined in the FLSA is nonexempt. The fact that they are nonexempt makes them eligible for minimum wage and overtime under the FLSA.

Health insurance, retirement plans, and paid time off are common perks. Conversely, hourly workers usually have clear boundaries—they clock in, they clock out, and that’s it. Balancing personal time with work commitments can be more straightforward for some but more complex for others, depending on the employment type. An employer cannot reduce an exempt employee’s salary for variations in quantity or quality of work, but deductions for other reasons may sometimes be permissible. Examples include certain types of absences, penalties for major safety or security violations, and unpaid disciplinary suspensions.

1. However, some lower salary positions are still eligible for overtime pay, based on state and federal laws.
2. Additionally, if the employee takes personal time (not for sickness or disability), then that time may be deducted from the employee’s allotted vacation/personal time.
3. For instance, if a salaried employee takes personal leave, their pay might be adjusted unless they use paid time off (PTO) or vacation days.
4. This is different from hourly employees, who get paid based on the number of hours they work.

This guide is intended to be used as a starting point in analyzing salaried employees and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services. Additionally, overtime pay of time-and-a-half is not usually offered for working more than 40 hours per week.

Payroll setup

Many people think that all salaried employees are exempt from overtime, no matter what their job duties or salary are. It’s important to know that exemption depends on more than just being salaried. The Department of Labor has rules to help decide whether salaried employees are exempt or non-exempt from overtime. The total number of hours a salaried employee may be expected to work is up to the employer’s discretion. However, it’s important to remember that non-exempt, weighted average method salaried employees must be paid the applicable overtime rate for hours worked in excess of 40 per workweek. Even if the employees are exempt, employers may want to maintain a positive work-life balance to avoid having a disengaged and burnt-out workforce.

Jobs come in many forms, and the line between hourly and salaried roles may seem blurry. Understanding these differences is essential for both employees and employers to ensure fair compensation, compliance with labor laws, and effective workforce management. Here, we’ll provide a complete overview of what it means to be a salaried employee. While tracking salaried employee time is not required by law, some employers choose to do so for various reasons. These benefits often include health insurance, retirement plans, paid time off, and sometimes bonuses or profit-sharing.

Employees protected by the FLSA must be paid at least 1.5 times their regular pay rate for overtime hours. Hourly employees often benefit from overtime protections under the Fair Labor Standards Act (FLSA). They are entitled to extra pay when they work more than 40 hours in a week. Hourly employees might have the chance to pick up extra shifts or reduce their hours when needed, providing flexibility that salaried positions often lack. Salaried employees generally have set expectations for their work hours, which can limit their ability to adjust their schedules on the fly.

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Employers typically pay salaries for FLSA-exempt job roles, but FLSA non-exempt employees can also receive a salary. Deciding turbotax online whether to pay an employee a salary comes down to a few different factors.First, consider whether the employee is FLSA-exempt or non-exempt. Most employers choose to pay FLSA-exempt employees a salary and to pay non-exempt employees on an hourly basis. While non-exempt employees can receive a salary, you’ll still need to track their hours and pay extra for any overtime. FLSA non-exempt employees can also be paid a salary, but this is rare since employers run the risk of paying for hours that an employee didn’t work.

Salaried Employees vs. Hourly Employees

When you understand what it means to hire a salaried employee, you can ensure compliance with labor laws and effectively manage your workforce. This knowledge is crucial for leadership, human resources, payroll, and legal teams to navigate the complexities of employee classifications and compensation structures. Exempt employees don’t get overtime pay, no matter how many extra hours they put in.

For hourly employees, the number of hours worked each week can be full-time or part-time. Many companies hire full-time salaried and full-time hourly employees, part-time and casual employees, and employees who only work when the business demands additional staff. If an employee is exempt from FLSA and any state, local, or union overtime laws, then it is legal to work 60 hours a week on salary. Some employers do pay exempt employees for overtime work through time-and-a-half, bonuses, or extra time off.

For employers, the more complex onboarding process for a salaried position may increase the cost of a new hire. Paid holidays are religious, national, or state holidays for which employees receive a paid day off from their employer. A full-time employee is an individual contracted to work the maximum weekly hours at an organization.

This annual amount is then divided into equal payments to be made according to the employee’s pay frequency (e.g., biweekly or semimonthly). Salaried employees do not legally have to clock in and most employers don’t require it. This is because salaried employers are often offered a higher level of trust and accountability than hourly-paid employees. Additionally, many salaried workers carry out odd and sporadic hours both at the office, at home, and while traveling for business so it can be burdensome to record time on and off the job.

Do Salaried Employees Get Paid If They Do Not Work?

Employers must pay the employee more than the minimum salary required by the FLSA and apply specific job duties tests. Some states have enacted more generous overtime laws and higher thresholds for requiring overtime pay for salaried workers. In those locations, the standard (federal or state) that applies is whichever would pay the higher amount.