What Is a Salaried Employee?

How Does Being a Salaried Employee Work?

If you're an employee who is paid a salary (instead of an hourly rate), you will receive a set amount of compensation on a weekly or less frequent basis.

Salaried employees are typically paid by a regular, bi-weekly, or monthly paycheck. Their earnings are often supplemented with paid vacation, holidays, healthcare, and other benefits.

Employees who are paid a salary are often qualified as exempt employees, or employees who don't qualify for overtime or minimum wage, according to the Fair Labor Standards Act (FLSA).

Employees must earn at least $684 per week ($35,568/year), receive a salary, and perform particular duties (as defined by the FLSA) to be considered exempt from overtime requirements under federal guidelines. There are also other exceptions based on occupation.

Example of a Salaried Employee

If you're an employee who is paid a salary (instead of an hourly rate), you will receive a set amount of compensation on a weekly or less frequent basis. If your salary is $60,000 a year, for example, you'll be paid that amount regardless of how many hours you work each week.

Salaried Employees vs. Hourly Employees 

There are many differences between a salaried employee and an hourly employee. First, while a salaried employee receives a fixed amount of money, an hourly employee receives an hourly wage for each hour worked. Therefore, salaried workers who meet the criteria as exempt employees do not have to keep track of their hours in the way that hourly employees do. For example, they do not have to sign a daily timesheet.

Most exempt salaried employees do not receive overtime pay. Salaried employees are paid their salary regardless of how many hours they work during a workweek.

This means that many high-paying positions do not receive extra wages, such as time and one-half for working more than 40 hours a week. However, some lower salary positions are still eligible for overtime pay, based on state and federal laws. 

On the other hand, hourly employees are typically able to receive time and one-half of their hourly wage for every hour of overtime work. Some employers even pay double time for holidays, although this is not mandatory.

Also, most salaried employees are considered exempt employees, while most hourly employees are considered non-exempt employees.

There are, however, some exceptions to this rule. For example, there are some exempt employees who are not salaried (such as those who receive a fee for a particular job, like a computer technician). There are also some non-exempt employees who are salaried, but their job duties fall under the definition of non-exempt.

The Pros and Cons of Being a Salaried Employee

Pros Explained

Better sense of security. Salaried workers usually receive a dependable, exact, and expected amount of money in each paycheck. This can provide a sense of security.

More likely to receive employee benefits. You're also more likely to receive employee benefits in a salaried position—particularly a full-time salaried position. These benefits often go beyond healthcare to include retirement contributions and paid vacations.

Higher perceived status. In addition, salaried positions often have a higher perceived status and job titles that seem more professional. A work history containing professional job titles can serve as a more marketable foundation for future career expansion.

Cons Explained

Usually unable to earn overtime. If you're an exempt salaried employee, you are typically not able to earn overtime pay.

May be expected to work long hours. In general, with a salaried position, you're often expected to do what it takes to complete tasks—meaning you might often work extra hours for no additional salary.

Can be harder to separate work and personal life. Sometimes you may be required to take work home or work late, which can cut into your personal life.

Frequently Asked Questions (FAQs)