What Is a Salaried Employee?
If you are a worker who receives a paid salary rather than an hourly rate, you will get the same amount of pay on a weekly or monthly basis, depending on the company you work for and their processes.
A worker on a salary contract will get paid their full salary even if they do not work their full number of hours in a week. This differs from unsalaried employees, who get paid based on the exact hours they work.
How Does a Salary Work?
When accepting a salaried position, you will be agreeing to a fixed amount of pay per month and will receive benefits such as holiday pay, healthcare, dental cover and more.
However, salaried employees are classified as exempt workers which means they cannot receive payment for any overtime worked.
So, whilst they might typically earn more yearly (on paper) than a non-salaried employee, a non-salaried employee is classified as non-exempt, which means they can apply for and receive payment for overtime hours.
A salaried employee can receive an agreed fixed amount weekly, monthly or bi-weekly – this all depends on the state you are working in, the type of work you do and the company you are employed by. Each of these can be a factor in the way payroll works.
Most Common Salaried Jobs
The type of jobs for which you are most likely to receive a salary and other benefits are traditionally office-based roles. However, we are seeing more and more salaried-staff working jobs that may once have been classed as hourly work, like construction for instance.
You work at a construction company as a project manager and the company wants you on payroll due to consistent work and loyalty to the company. This will include regular compensation and other perks.
Other common salaried jobs include:
Office administration – Working and undertaking tasks that are mainly office-based.
Advertising and marketing – If you majored in marketing, a salaried job is on the horizon.
Publishing – This type of industry is normally salaried as it is a longstanding career that employees stay in for a while.
Many other industries tend to offer salaried employment. If you are looking for a stable income, you may be best suited to one of these positions.
What are the Minimum Salary Requirements?
The minimum salary requirements can differ from state to state, so if you are unsure, seek further advice.
The federal minimum pay for non-salaried workers is $7.25 and has been this figure since 2008.
In some instances, employers have been known to pay less than this amount – which is legal. This will depend on the industry you work in and the type of work you have been employed to do.
This could include the following types of workers:
- Non-profit organizations
- Some disabled workers
However, your salaried wage can vary over time and employers regularly review their staff contracts to ensure they are on the right salary for their role, are competitive to attract the best employees and meet industry standards.
For example, a company may be paying a graphic designer less than a competing business. This may be taken into account over time, but again, it will depend on the employer.
Income for salaried staff can increase over time depending on their performance, length of time at the business and other factors. You might also have access to yearly bonuses which will only be available to salaried employees.
You have been working as a personal assistant to a managing director of a media firm and have been there for over five years. Your contract states that you are due to receive a salary increase after five years due to loyalty to the company. The human resources department will issue you with a new contract stating your new salary.
You are currently a project manager at a big tech company but have recently been promoted to the position of senior project manager. This new role comes with more responsibility and will take a lot more scheduled time. This should mean you are entitled to a salary increase.
What Is the Difference Between Hourly and Salaried Employees?
A non-salaried, hourly employee gets paid by the hour. Their take-home pay is dependent on the hours they work and can differ from week to week and month to month.
An hourly employee is also classed as non-exempt. A non-exempt worker can obtain overtime pay via the Fair Labor Standards Act.
Some states have even increased their overtime threshold. If you are not sure what you are entitled to, we would recommend speaking to the state.
Most employees should be paid the federal minimum wage as mentioned above and can be owed time and a half if they work over 40 hours in a given week.
However, if you are a salaried employee, you are classed as exempt which means you are not automatically entitled to overtime. You are expected to work the designated hours in your contract and receive the same compensation.
In some roles, pay for overtime can be negotiated, but in others, you will be expected to do the hours required for the total sum of your agreed salary.
You are a personal assistant on a salary and your boss needs you to help her with something whilst she is away at the weekend. She is happy to pay you overtime for your extra hours and ensures it is added to your next salary payment.
In other circumstances, your boss or company might include other benefits in exchange for overtime.
You are working at an annual event one evening outside your contracted hours and are offered an extra day’s holiday in lieu of overtime pay.
You often work extra hours, your boss notices the hard work you have been putting in and offers you a raise to reflect all the overtime you are doing.
It all depends on your company.
In summary, the differences between salaried and hourly workers are:
- You will not automatically qualify for overtime
- You are classified as exempt
- You will receive a set salary per week, fortnight or month – regardless of the hours worked
- You might be offered other perks and benefits within your contract, or in lieu of overtime
- You qualify for overtime and can be paid time and a half for any work over 40 hours
- You need to keep a timesheet
- You will not receive a set income and pay will be determined by how many hours you have worked
- You will normally hold non-exempt status
How Is a Salary Calculated?
If you are a salaried employee, your salary is usually determined by:
- The industry you work in
- The company you work for
- The seniority of your role
For example, if you are a director, your salary will be a lot higher than if you are a secretary.
It could also differ due to the tasks and responsibilities your role entails.
If you are a salaried employee, your salary can increase over time if your job description changes or you are promoted.
To calculate your weekly or monthly earnings, there are handy tools you can use to discover your take-home amount after taxes and other factors are deducted.
You can try something called a paycheck calculator which will advise you of the actual amount you will receive in each paycheck, taking into consideration any monies that go towards the Federal Insurance Coverage Act (FICA). FICA accommodates benefits such as medical programs and social security.
Before you use these online tools, calculate your gross monthly salary by dividing your annual salary by 12 (as each month you will receive one-twelfth of your salary).
For example, if your annual salary is $55,000 per year, deduct this by 12 to show your monthly salary of $4,583.33 per month.
Remember, this is the amount you are set to receive before any deductions.
To work out your actual take-home pay, input this amount into a paycheck calculator to work it out for you. This is handy as you will know where you stand financially each month.
If you are still unsure about how your current salary is being calculated and want to find out more, you can discuss this with your boss, HR department or state.
For more on how a total salary is calculated, see our article on How to Evaluate the Compensation Package and Job Offer.
Pros and Cons of Being a Salaried Employee
There are pros and cons to most things, and being on a salary is no different.
There are many contrasting factors you must take into consideration when planning to take a salaried position, especially if you have spent most of your career as an hourly worker.
The Pros of Being a Salaried Employee
Fixed pay – Salaried employees will receive the same amount of compensation per week/month (whenever their specific payment period is). This is something that can be quite alluring to a worker on an hourly contract as they can plan around a set incoming amount. This helps if they are planning on buying a property, for example. It might also mean a more stable income which they might not have received at their hourly position.
Higher pay – Jobs with a salary usually pay more. This could be to accommodate for lack of overtime, but salaried workers are known to receive more compensation than hourly workers.
Career path – You may have a better chance of being promoted within a company. For instance, if you start in the mailroom of a firm but are on a salary, you might have more opportunity to grow and be promoted to a higher position within the company.
Benefits and perks – Most salaried employees are entitled to an array of different benefits and perks. These could include but are not limited to: Medicare, dental cover, life insurance, pensions and holiday pay. Your company might also offer additional perks in exchange for overtime, as mentioned previously in this article.
Training – As a salaried employee, you might be entitled to on-the-job training. This could be during the onboarding process or during your employment. This is perfect for new workers, recent graduates or someone switching careers.
Length of time – If you are contracted to earn a salary, you are probably expected to be a permanent fixture of the team, thus giving you a bit more security. Salaried positions can also provide a longer notice period if you are laid off for any reason.
Responsibility and variety – You might be offered more responsibility, have the opportunity to work on tasks you enjoy and be able to increase your experience at the same time.
The Cons of Being a Salaried Employee
Less flexibility – If you are a salaried employee, you might not have as much flexibility as someone who is on an hourly contract. You will be contracted to work a set number of hours each week, and any changes will be at your manager’s discretion.
Exempt – Salaried employees are exempt which means you are not automatically eligible to work overtime or receive overtime pay. Some people might want to earn a little more than their salary, so would miss the overtime. However, you might be compensated with perks and benefits.
Required availability – Regardless of your job role, you are expected to be available during your contracted working hours and will not usually be able to negotiate different shift patterns to suit your lifestyle.
Wait for salary review – You might not receive the salary you were hoping for, yet do not have the opportunity to earn more by working more hours; you will have to wait for a salary review.
The salary you receive will depend on your job title and the roles and responsibilities you must undertake for your position. However, there is always room for negotiation.
If you are looking to start a new salaried job, read the job description thoroughly before signing a contract.
Compare the salary and job description to other job advertisements to see if the salary being offered is fair compared to competitors, or to what you have been paid previously.
Do your homework and seek advice before signing any contract.