A Brief Overview
A salary provides a stable income
stream to the employee.
Since the amount paid is fixed and
predictable, budgeting is easier — for
both the employer and the employee.
While a salary is more predictable
for employers, it means committing
to this outlay even in slow periods.
Full-time, salaried employees are
entitled to benefits such as health
insurance and paid time off that
most hourly employees are not.
Employers are less likely to reduce
the pay of salaried employees than
cut back hourly workers.
Salaried employees may have to
put in more than 40 hours per
week to get the work done, a
benefit for employers.
Pay is for results rather than hours
worked. The employee is paid the
same whether the assignment took
three hours or nine hours.
Salaried workers tend to stay on
the job longer and be more loyal to
Gives seasonal businesses
flexibility over labor costs with the
ability to assign hours and adjust
shifts to meet demand.
When seeking part-time workers,
hourly pay is generally the more
Hourly pay may give workers more
flexibility in their work schedules.
Hourly pay makes workers more
vulnerable to cutbacks in their hours.
Workers get paid for exactly the time
they put into the job, including time-
and-a-half for overtime,which is good
for employees but not for employers.
Requires much more
administrative overhead to
calculate hours, overtime, etc.
Employers save on the costs of
providing health insurance and
other benefits, while employees
have to arrange for their own
Part-time, hourly work allows
salaried workers to pick up extra
income to supplement their salary,
and allows employers to ramp up
during certain periods.
Exempt and non-exempt job classifications are determined by the
FLSA (Fair Labor Standards Act). Exempt employees are usually paid
a salary, but non-exempt employees can be salaried or hourly.
there were more hourly workers than salaried
workers in the U.S. In fact, more than
78 million Americans — or nearly 59% of the U.S.
workforce — were paid on an hourly basis.