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Jan08

Hourly vs. Salaried non-exempt

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What is the difference between an hourly employee and a salaried non-exempt employee?

Thanks

Thanks for an excellent question!

There are very few differences between an hourly and a non-exempt salaried employee. Basically, a non-exempt salaried employee is paid a weekly salary, rather than an hourly wage. This is usually done for the employers convenience, in figuring payroll.

For example, Kate has an insurance office that employs 4 people. The office is open 40 hours per week, and all the employees work those same 40 hours almost all the time. Rather than use timecards and tabulate payroll every week, it is easier for Kate just to put all 4 of the office workers on salary. They are each paid the same amount every week. Instead of paying the receptionist, Tina, $10 per hour, Kate pays her $400 for a 40-hour week.

However, because three of the four employees are non-exempt, they are entitled to overtime when they work more than 40 hours in any payroll week. In addition, if the employees work less than 40 hours in a payroll week, their salary can be adjusted accordingly. If Tina works 41 hours one week, she is entitled to one hour of overtime at $15 per hour. If she only works 39 hours one week, she is entitled to only $390 for the week.

By contrast, an exempt salaried employee is entitled to the same weekly salary, regardless of how many or how few hours the employee works in the week. (There are a few exceptions. You will find them if you search our archives for: exempt.) Kates office manager, Mark, is an exempt salaried employee earning $600 per week. When Mark works 31 hours per week spread over 5 days, he must be paid $600 per week. When he works 60 hours per week, he still earns $600 for that week.

Some unscrupulous employers try to avoid overtime by putting every employee on salary, but it does not work that way. Exempt or non-exempt status is determined by the employees primary job duties, not by how payroll is calculated. We just explained that a bit more throughly, a few questions ago. Look for the title exempt/non-exempt.

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10 Responses to “Hourly vs. Salaried non-exempt”

  1. rob adolfson Says:
    November 4th, 2009 at 7:29 pm

    I am a tv cameraman for a major cable network. I am employed by a production company of about 40 employees. Of these 40 employees there are 7 about contractual on air talents. There are 3 cameraman. When i was hired I was told that I was salaried non exempt. This was due to the fact that my job is extremely physically demanding. I carry a 24+pound camera on my shoulder 8-12 hours a day on average. I need to know what the Tennessee law states about my status. Should I be salaried exempt or non exempt. They dont give me comp time officially and definitely NO OVERTIME. There are many occasions that we travel and work many weekends(12-15 hr each day). Is the employer required to comp time or overtime? So in recap do we need to be salaried exempt or non exempt due to the strenuous job activities that we perform each and everyday?

  2. Caitlin Says:
    November 4th, 2009 at 10:34 pm

    Hi rob! This is a matter of federal, not Tennessee law. From your description of job duties, you are legitimately a non-exempt employee. That means you are entitled to overtime when you work more than 40 hours in the payroll period — even if you are normally paid a salary. Comp time is not lawful for private businesses. HTH, and thanks for reading the blogs!~Caitlin

  3. CATHY MCKENZIE Says:
    January 22nd, 2010 at 5:21 pm

    If a salary non exempt person misses work and they are out of personal days and vacation days can you dock their pay?

  4. Caitlin Says:
    January 22nd, 2010 at 9:24 pm

    Hi CATHY! Yes, an exempt or non-exempt employee can be docked under those circumstances, if they miss one full day of work or more. HTH, and thanks for reading the blogs!~ Caitlin

  5. Ginger Rausch Says:
    March 1st, 2010 at 10:53 am

    Can a salary exempt or salary non-exempt be docked for partial days when they are out of personal or vacation days?

  6. Caitlin Says:
    March 1st, 2010 at 12:01 pm

    Hi Ginger! A non-exempt salaried employee can be docked for partial workdays missed. An exempt employee cannot. HTH, and thanks for reading the blogs!~ Caitlin

  7. Lou West Says:
    April 27th, 2010 at 9:51 am

    Question:
    On the earlier blog example with Kate and Tina, you mentioned Tina getting compensated $390 for 39 hours of work when she is Non-Exempt Salary. Based on a 40 hour workweek, I thought she must get paid $400 (or the equivilant of 40 hours of work) when she acquires less than the 40 hours of work? So, in this case, she receives this compentation (for 1 hour) out of her vacation time? This is what I am being told. Is that true?

  8. Caitlin Says:
    April 27th, 2010 at 12:39 pm

    Hi Lou! No. Tina would be entitled to her full salary if she were an EXEMPT employee, but the question above refers to a NON-EXEMPT salaried employee. These are entirely different. (For one thing, under federal law an employee cannot be exempt unless he or she earns at least $455 per week.)A NON-EXEMPT salaried employee can be paid for 24 hours if she works 24 hours during the week. An EXEMPT employee must generally be paid for the entire week. HTH, and thanks for reading the blogs!~ Caitlin

  9. GM Says:
    July 23rd, 2010 at 10:12 am

    I want to make sure I am understanding correctly. If I have a salary non-exempt employee & she is taking part of a day off, for personal reasons, can we make them take vac/sick time accrued. Also, if they do not have any accrued time left, can we dock them for that time. I thought if they were salary exempt or salary non-exempt that we could not dock their pay less that their 40 hrs.
    Thx

  10. Caitlin Says:
    July 23rd, 2010 at 1:22 pm

    Hi GM! Your understanding is mostly correct.

    A NON-EXEMPT salaried employee is basically an hourly employee. A non-exempt employee may usually be paid by salary to make it easier to figure payroll, but if the employee misses a few hours of work, her pay can be docked. If she works more than 40 hours per week, she is entitled to overtime.

    An EXEMPT employee must be paid his or her usual salary for the week. However, the federal FLSA does not prevent you from using the employees PTO, vacation or sick time as a portion of that pay. What is important is the amount on the paycheck, not how you tabulate it. An exempt employee who works any portion of the day is entitled to her full pay for the day, even if she has no sick time or PTO time left.

    For a more detailed answer, post a question, rather than a comment, and mention your state. HTH, and thanks for reading the blogs!~ Caitlin

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