What Is Base Salary and Who Receives It?
Think of Base Pay as Your Guaranteed Compensation As an Employee
Base salary is a fixed amount of money paid to an employee by an employer in return for work performed. A base salary does not include benefits, bonuses or any other form of potential compensation from an employer.
If you are a job searcher, base pay is the amount of money that you are offered by the employer to do a specific job. Your job offer letter may also include additional information about the other monetary aspects of your potential pay should you accept the offer. But, the base salary you are offered is just that—a base.
An employee who is paid a base salary is expected to complete a whole job in return for the base salary. They are also generally expected to work forty or more hours in a week to accomplish the requirements and goals expected from an employee who is performing a whole job.
Smart employers assign goals and measurable outcomes to jobs that pay a base salary. This enables both the employer and the employee to determine that the employee is, in fact, performing the whole job for which he or she receives the base pay.
The salaried employee or employee who is paid by base salary does not track the number of hours worked and is not paid for overtime. Consequently, only rarely do employers require anything but an honor system to track employee hours.
In fact, any employer who asks salaried employees to punch in at a time clock or publicly account for hours worked risks turning an individual who was hired to perform a whole job into a clock-punching 40 hour a week worker. This defeats the purpose of offering and paying a base salary to salaried employees.
Some public sector, often union-represented employees, expect to account for hours and collect compensatory time off. This is not the norm in the private sector. Compensatory time for salaried employees who receive a base salary is usually the product of a union workplace. Employees who seek comp time have frequently worked part of their careers in a union-represented workplace.
This is different from a non-exempt or hourly employee who is paid an hourly rate or by the piece produced. This non-exempt employee is generally eligible to collect overtime for hours worked over the basic 40 hours.
But, the hourly or non-exempt employee rarely has a base salary. Some employers guarantee hourly employees that they will pay them for a minimum number of hours worked. This allows the employees to plan financially, but it is not the same as receiving a base salary as exempt employees do. It is not guaranteed unless the hourly employee works the required number of hours.
Because of the Fair Labor Standards Act (FLSA) rules about overtime payment, employers are required to closely track the hours and partial hours worked by non-exempt or hourly employees. This usually requires that employees punch a time clock, or at a minimum, record their hours worked, most often with a supervisor's signature that verifies that the accounting is accurate.
Employers must take these measures because the requirements to pay overtime are stringent in workplaces that are governed by the FLSA overtime pay requirements. Employers who fail to accurately pay employees are subject to fines and potential litigation.
More About Base Salary
Base salary is determined by market pay rates for people doing similar work in similar industries in the same region. Base salary is also determined by the pay rates and base salary ranges established by an individual employer.
It is also dependent on market pay outside of the company’s region as desirable skills become more difficult to recruit and employers raise base pay rates to win in the competition for the talent they need.
Base salary is also affected by the number of people available to perform the specific job in the employer's employment locale. In the local competition for talent, salary speaks loudly.
Many companies participate in base salary market surveys to create a trustworthy resource for base salary research. More and more research about base salaries is occurring online using base salary calculators and extensive resources available from sites such as payscale.com.
The sites allow an employer to input in detail factors relating to the job and region. This allows employers to see the range in base salaries that particular positions pay. It also allows your candidates to see the same information, an advantage that employers had in the past that no longer gives them the upper hand in a base salary negotiation.