Salaried employees usually don’t get overtime in the US, even if they work extra hours.
In the US, the pay is calculated on two aspects- a fixed salary and hourly wages. Both these modes of payment have their advantages, overtime pay notwithstanding.
The Fair Labor Standards Act or FLSA has a set of rules that exempts or does not exempt an employee from overtime. It might seem at first that denying overtime to salaried individuals is not the right thing to do. However, there are several factors which balance the equation.
Added to that is the fact that employees should also enquire about whether they are entitled to get overtime or not.
Hence, even if the salaried employee works more than 40 hours a week, they will not get any amount over their salary.
Here is a brief overview.
What is The Difference Between Hourly Pay Rate And Salary?
The hourly pay rate is what the employee gets paid for the total number of hours they have worked. It includes all their regular work hours, as well as any overtime.
The salaried individuals get a fixed paycheck at the end of the month. They usually have to work 40 hours per week. Even if they work for more than that, they do not get overtime.
Although this is the main difference, there are some other differences between salaried professionals and those working with hourly rates.
Salaried individuals may not get extra money for their extra hours of work. However, depending on their organization, they are entitled to medical insurance, sick leaves, and other perks and benefits. They are also entitled to minimum wage. They are also assured of a fixed paycheck at the end of the month.
However, those working hourly get overtime for the extra hours they clock. However, they do not get other benefits like insurance.
In addition, the employer can easily cut back the number of hours of employment. It usually happens when the peak season ends and employers want to save more money. They are also not entitled to minimum wage.
Why Are Salaried Employees Not Paid Overtime?
The Fair Labor Standards Act (FLSA) has laid down minimum wage and overtime pay rules. There are two types of classification under FLSA.
1. Exempt Employees
Salaried employees are not paid overtime because, under the FLSA classification, they are classified as exempt employees.
Exempt employees are not entitled to get overtime or minimum wages.
Any employee who receives a wage of $684 a week or an annual package of $35,568 comes under exempt employee. In addition, they also receive perks and insurance from their company, as mentioned above.
According to the duties test, salaried employees are mostly employed in executive, administrative, and professional categories. According to the duties test, anyone categorized differently could be classified as non-exempt, even if they are salaried individuals. They qualify for minimum wage and overtime in such cases.
Also, if a salaried individual earns less than $684 a week, they can qualify for minimum wage and overtime.
2. Non-Exempt Employees
Those who get paid hourly are classified as non-exempt employees. They get minimum wage. They get paid for every hour they work, including overtime.
In addition, they can also make time-and-a-half and can work more to get double time as well. They are also said to have better work-life balance, as they usually get to choose their workload.
However, such a work pattern may be suitable for short bursts, as working continuously for prolonged hours may cause burnout.
Those who work hourly are not sometimes on the company’s direct payroll, which could mean less job security. Moreover, they are also not covered by medical insurance by their employers. Nor do they receive other benefits.
Is Working as a Salaried Employee Better or on an Hourly Basis?
Many professionals often wonder whether it would be better to work independently and work on an hourly basis. It’s because salaried employees often feel stressed at work. They have to work 40 hours a week and more at certain times at the behest of their employers. And they wouldn’t get paid overtime.
Those who work hourly often choose their workload by deciding the number of hours they wish to clock. They do not have to deal with irregular work hours or stay longer without getting paid. They could work overtime when they feel like it.
However, a fixed salary ensures a guaranteed income, and the employer cannot simply reduce the salary or the work hours on a whim. Besides, a salaried professional’s yearly income is higher than an employee working hourly, even with all their overtime.
Moreover, salaried individuals have better chances of getting approved for loans because of their guaranteed income. And although they do not get overtime, they have certain rights under the US Department of Labor.
Hence, whether you want to continue as a salaried employee or work hourly depends entirely on the lifestyle and work hours you want to enjoy.
How is The Timing Differentiated Between Hourly-Paid Employees And Salaried Employees?
Salaried employees work for a company and must fulfill a particular set of tasks and projects. Usually, they have to work 40 hours a week, but if they have to work more to complete their work, those hours are not clocked.
Salaried employees will get their salary if they meet deadlines and make profits for the company. In recent times, as long as they complete their tasks, they can also work from home or while traveling, so the exact number of work hours is not calculated.
For those who work hourly, the employees must fill in a sheet detailing the exact time they come and leave work. It’s mostly for labor-intensive work like serving tables, working with heavy machinery, or working at the front desk, where the employee has to be present.
However, they have greater autonomy and can choose how many work hours they want to put in. They can negotiate with their employers about their work hours.
It is important to remember that salaried employees also have rights. Employers cannot ask them to work endless hours because they do not have to be paid overtime.
The 40 hours per week can go up to 45 hours or a maximum of 50. It usually does not go beyond that; employers asking for more from employees would be considered exploitative.
Can a Salaried Employee Ask For Overtime?
Yes, salaried employees do not get overtime. In some areas, employees are restricted from working overtime or must be compensated accordingly. However, if you are particular about working extra hours, you can research local, state, or federal regulations.
You can ask to be compensated in other ways if you are frequently asked to work on weekends. There is no compensation for exempt employees if they don’t work on weekends or holidays.
However, this is mostly a verbal agreement between the employer and the employee. A salaried employee may refuse to work overtime. Still, it will reflect poorly on their record, and the employer can say they are uncooperative.
Are There Any Deductions For Salaried Employees And Those Who Work Hourly?
Salaried employees could have their pay deducted if they violate safety rules, break company policies or endanger the life of any other employee. Disciplinary action can also be taken against them. In addition, there may be tax deductions as applicable.
Hourly paid employees do not have to worry about taxes much, and most pay their taxes. However, employers can deduct their pay as a penalty if they also violate any company policy or break any rules.
What Should Salaried Employees Remember?
Salaried employees should remember a simple rule when it comes to overtime. You are entitled to overtime if your salary is lower than $684 per week. Some unethical employers will not tell their employees about this rule, and they keep them from getting what they rightfully deserve.
Go through the employment contract and see if there are any other deductions from which you may be exempt, depending on your state or local union rules.
Salaried employees do not get paid overtime, and despite putting in quite a few extra hours, they often go without extra pay. However, they are adequately compensated through other perks and benefits. Many employers will also give them bonuses at the end of the year.
Some companies also have paid leaves and other travel allowances that keep employee satisfaction high, as a result of which they do not mind putting in extra hours occasionally.