The United States Department of Labor mandates the federal wage laws that affect salary and hourly employees. There are distinct differences between the employment laws for salaried employees and those for hourly workers.
The Labor Department administers the Fair Labor Standards Act (FLSA), which regulates wages, employee record-keeping and child labor. The FLSA also sets the standards under which employees are labeled either exempt or nonexempt. Exempt workers do not qualify for overtime pay while nonexempt workers do. Most salaried workers are exempt and most hourly workers are nonexempt.
Under the FLSA, nonexempt workers must receive no less than the federal minimum wage of $7.25 per hour, effective July 24, 2009. They also qualify for overtime pay for hours worked above 40 during the workweek at 1 1/2 times their regular pay rate. Hourly workers are paid according to the number of hours worked. Salaried workers receive a guaranteed amount of pay, regardless of hours or days worked, unless permissible deductions (as outlined by the FLSA) apply.
The FLSA has specific definitions for salary and hourly workers, so the employer should consult its state labor board for clarification. Additionally, some states set their own minimum wage and overtime laws. The Labor Department says the employer should use the higher pay rate when federal and state laws conflict.