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Salary vs Hourly employees: A Brief Overview


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The following infographic illustrates an overview of the differences between salary and hourly employees.

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Salary vs Hourly employees: A Brief Overview

  1. 1. SALARY vs. HOURLY employees: 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 the employer. 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 logical option. 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 medical insurance. 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. BONUS TIP: 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. In 2017, 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. Salary Hourly source: