A salaried employee is one who receives a predetermined amount of pay, weekly or on a less frequent basis, such as biweekly or semimonthly. This amount can be all or a portion of the employee’s pay, but it must be a guaranteed minimum that she can count on. This guaranteed minimum is one of the many advantages of being a salaried worker.
A salaried employee is expected to put in the work necessary to get the job done. He usually has more responsibilities than an hourly employee and often receives higher earnings. A salaried-exempt employee is one who is exempt from the Fair Labor Standards Act’s overtime pay requirements. To obtain this exemption, the employee must meet the FLSA wage and/or job duties test. This includes most professional, administrative and executive employees who are paid on a salary basis. These employees generally have more potential for job growth than an hourly worker and have a steady stream of income that they can look forward to each payday. Notably, on occasion, a salaried employee does not meet the FLSA exempt requirements and is therefore nonexempt. In this case, he is entitled to his salary and overtime, if worked.
An hourly employee’s pay can change each pay period, because her payment is based on hours worked. She might, for example, work 40 hours one week and 32 the following week. A salaried employee receives her full pay regardless of the amount of hours or days she works. The only exception is if a permissible deduction applies, or if she does not perform any work in the workweek. In the latter case, the employer does not have to pay her for that week. The employer pays full salary, even if no work is available. As long as the employee is capable, ready and willing to work, she must receive her full salary.
Unlike an hourly employee, who does not receive pay for hours that he is absent, unless he has benefit days/hours to cover the time frame, a salaried employee receives his full salary for partial day absences. Specifically, the employer pays for the entire day even if she takes a half-day off. The employer can deduct salary only in certain cases, such as overuse of benefit days, unpaid suspension and unpaid leave taken under the Family Medical Leave Act (FMLA). The employer deducts salary only in full-day increments. So if a salaried employee takes three and a half days off, the employer deducts for three days only.
The FLSA mandates federal record-keeping laws, which require employers to keep timekeeping records, including work hours for nonexempt workers – this accounts for most hourly employees. The FLSA requires employers to keep records showing the basis for which exempt wages were paid but not work hours – this accounts for most salaried employees. Consequently, many employers do not require salaried employees to punch a time clock or complete weekly time sheets. Because salaried employees often receive the same pay each pay period, they do not have to spend time tracking their work hours.
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.