What Does it Mean to Be Salary Vs. Hourly?

By Mary Frazier

The Fair Labor Standards Act (FLSA) in federal law governs most jobs. Under FLSA jobs are divided into exempt and non-exempt jobs. If an employee is non-exempt he is earning at least minimum wage and is entitled to overtime pay. Exempt jobs are salaried positions, and do not qualify to receive overtime.

Minimum Wages and Overtime

Employees who are not exempt under FLSA receive at least minimum wage of $7.25 per hour, as of July 24, 2009. A wage earner is entitled to receive overtime for hours worked beyond the normal 40-hour workweek. If a wage earner receives tips, the employer pays $2.13 per hour in wages if the hourly wage plus tips add up to the federal minimum wage. Youths under age 20 are paid minimum wage of $4.25 per hour for the first 90 days of employment. After 90 days of continuous employment the youth receive full federal minimum wage of $7.25.

Sales Commission Jobs

The FLSA defines certain occupations as exempt from minimum wage or overtime requirements. Exemptions are based on a normal workweek and apply to professions such as commissioned sales employees that are not subject to overtime if one-half of the employee earnings come from sales commissions and the employee has an average of one and one-half times the minimum wage for each hour worked.

Salary Test

FSLA rules are complicated to navigate. FSLA has a "rule of thumb" that states if an employee receives pay with a guaranteed minimum not based on hours of work then the employee is an exempt employee that receives a salary. Most jobs are salary positions if the employee receives at least $23,600 per year, receives pay on a salary basis and performs exempt job duties.

Exempt Salary Positions

Jobs that pay salary and are exempt from overtime include professionals such as teachers, doctors, clergy, lawyers and engineers. The exempt classification basis is on the employee engaging in a "learned profession". Some administrative jobs are exempt salary positions. These positions include high level administrative workers such as labor relations and human resource personnel that are critical to running the business.

About the Author

Mary Frazier began writing in 2011 for various websites and has over 20 years of experience as a bank vice president and senior trust officer. Frazier is a Certified Trust and Financial Advisor, holds a Bachelor of Arts in economics from the University of North Florida and holds a Master of Science in finance from the College for Financial Planning.