What Is a Salaried Employee?

Definition & Examples of a Salaried Employee

description of salaried employees

The Balance / Bailey Mariner

A salaried employee is a worker who is paid a fixed amount of money or compensation (also known as a salary) by an employer. For example, a salaried employee might earn $50,000 per year.

Learn about what being a salaried employee entails, its pros and cons, and the difference between salaried and hourly employees.

What Is a Salaried Employee?

If you're an employee who is paid a salary (instead of an hourly rate), you will receive a set amount of compensation on a weekly or less frequent basis.

Employees who are compensated on a salary basis receive their full pay, regardless of how many hours they work in a week. 

How Does Being a Salaried Employee Work?

Salaried employees are typically paid by a regular, bi-weekly or monthly paycheck. Their earnings are often supplemented with paid vacation, holidays, healthcare, and other benefits.

Employees who are paid a salary are often qualified as exempt employees, or employees who don't qualify for overtime or minimum wage, according to the Fair Labor Standards Act (FLSA).

Effective January 1, 2020, employees must earn at least $684 per week ($35,568/year), receive a salary, and perform particular duties (as defined by the FLSA) to be considered exempt from overtime requirements under federal guidelines.

However, some states have enacted more generous overtime laws and higher thresholds for requiring overtime pay for salaried workers. In those locations, the standard (federal or state) that applies is whichever would pay the higher amount. Check with your state’s department of labor for the current overtime provisions in your area.

Salaried Employees vs. Hourly Employees 

Salaried Employees Hourly Employees
Do not usually have to keep a timesheet

Need to keep a timesheet

 

Receive a fixed amount of money no matter how many hours worked, usually without overtime pay

Paid per each hour worked, usually with overtime pay
Usually qualify for exempt status  Usually have non-exempt status

There are many differences between a salaried employee and an hourly employee. First, while a salaried employee receives a fixed amount of money, an hourly employee receives an hourly wage for each hour worked. Therefore, salaried workers who meet the criteria as exempt employees do not have to keep track of their hours in the way that hourly employees do. For example, they do not have to sign a daily timesheet.

Most exempt salaried employees do not receive overtime pay. Salaried employees are paid their salary regardless of how many hours they work during a workweek.

This means that many high-paying positions do not receive extra wages, such as time and one-half for working more than 40 hours a week. However, some lower salary positions are still eligible for overtime pay, based on state and federal laws. 

On the other hand, hourly employees are typically able to receive time and one-half of their hourly wage for every hour of overtime work. Some employers even pay double time for holidays, although this is not mandatory.

Also, most salaried employees are considered exempt employees, while most hourly employees are considered non-exempt employees.

There are, however, some exceptions to this rule. For example, there are some exempt employees who are not salaried (such as those who receive a fee for a particular job, like a computer technician). There are also some non-exempt employees who are salaried, but their job duties fall under the definition of non-exempt.

The Pros and Cons of Being a Salaried Employee

Pros
  • Better sense of security

  • More likely to receive employee benefits

  • Higher perceived status

Cons
  • May be expected to work long hours

  • Usually unable to earn overtime pay

  • Can be harder to separate personal and work life

Pros Explained

Better sense of security: Salaried workers usually received a dependable, exact, and expected amount of money in each paycheck. This can provide a sense of security.

More likely to receive employee benefits: You're also more likely to receive employee benefits in a salaried position—particularly a full-time salaried position. These benefits often go beyond healthcare to include retirement contributions and paid vacations.

Higher perceived status: In addition, salaried positions often have a higher perceived status and job titles that seem more professional. A work history containing professional job titles can serve as a more marketable foundation for future career expansion.

Cons Explained

Usually unable to earn overtime: If you're an exempt salaried employee, you are typically not able to earn overtime pay.

May be expected to work long hours: In general, with a salaried position, you're often expected to do what it takes to complete tasks—meaning you might often work extra hours for no additional salary.

Can be harder to separate work and personal life: Sometimes you may be required to take work home or work late, which can cut into your personal life.

Key Takeaways

  • Salaried employees receive a set amount of compensation on a regular basis regardless of how many hours they work.
  • They're usually exempt, meaning they don't qualify for overtime pay or minimum wage—even when expected to work long hours.
  • Advantages can include a better sense of security, receiving employee benefits, and a higher perceived status.

Article Sources

  1. U.S. Department of Labor. "Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA)." Accessed June 20, 2020.

  2. U.S. Department of Labor. "Final Rule: Overtime Update," Accessed June 20, 2020.

  3. SHRM. "How Do State Overtime Pay Rules Differ From Federal Law?" Accessed June 21, 2020.