If you are an hourly employee, your employer will issue to you an IRS Form W-2 once per year. The W-2 lists your name, address, gross wages and taxes withheld from your wages. The W-2 also contains information regarding your employer. An employee is sometimes referred to as a W-2 employee to distinguish him from independent contractors. W-2 employees can be paid hourly or a salary.
A W-2 hourly employee refers to an employee that is paid by the hour for his time, as opposed to a salary. This means that the employee only gets paid for the amount of time he works. Unlike W-2 salaried employees, hourly employees are usually not entitled to sick pay and insurance benefits. However, W-2 hourly employees are usually entitled to overtime pay if they work more than 40 hours per week. W-2 hourly employees must be paid no lower than the federal or state minimum wage, whichever is higher.
A W-2 salaried employee is the other category of W-2 employee. A salaried employee is also issued a W-2 and in all respects the W-2 form is identical to an hourly employee. Salaried employees are not entitled to overtime and generally must be paid the same amount each pay period, even if they do not work each day. Like a W-2 hourly employee, the employer must withhold taxes from each paycheck for payment to the government.
W-2 Hourly Non-Exempt Status
A W-2 hourly employee is usually considered a non-exempt employee for purposes of state law and the federal Fair Labor Standards Act. This means that an hourly employee is entitled to various protections under state and federal law. For example, under certain state laws, a non-exempt hourly employee is entitled to a lunch hour and breaks if he works a sufficient number of hours. Generally, hourly employees are non-exempt, but the legal definition of this term varies according to which law it is applied, and is difficult to precisely define.
W-2 Hourly Taxes
A W-2 hourly employee must have his federal and state taxes withheld from each paycheck. The amount withheld is based upon the number of exemptions set forth on IRS Form W-4. Employers must regularly make payments of these payroll taxes to governmental taxing agencies. The taxes withheld from a W-2 hourly employee include federal income tax, state income tax, Social Security tax, Medicare tax and any local or specialized state taxes. Employers must pay half of the Social Security and Medicare taxes owed by a W-2 hourly employee.
- "Understanding Employment Law"; Richard A. Bales; 2007
- Chamberlain, Kaufman and Jones: Coverage Under the FLSA