1. Money

What's the Difference Between Salaried and Hourly Employees?

By

Question: What's the Difference Between Salaried and Hourly Employees?
Answer:

A salaried employee is paid based on an annual amount, called a salary. An hourly employee is paid based on an hourly amount.

How to Calculate Pay for Salaried and Hourly Employees

A salaried employee is paid $20,000 a year. This salary is divided by the number of pay periods in the year to determine the salary for each pay period. If salaried employees are paid monthly, this employee would receive $1666.67 a month.

An hourly employee is paid $9.62 an hour. To find this employee's pay amount, the hourly rate is multiplied by the number of hours worked in a pay period.

For calculation purposes, a salaried employee is determined to work 2080 hours a year (52 weeks times 40 hours a week). So, in the examples above, the $9.62 an hour paid to the hourly worker is roughly the same as the $20,000 annual salary paid to the salaried worker.

What Determines if an Employee is Salaried or Hourly?
The distinction between salaried and hourly employees is based on the type of work done by these employees and their status as exempt or not exempt from overtime. Professional employees, managers, and supervisors are exempt from overtime requirements; these employees are often paid a salary.

©2014 About.com. All rights reserved.