Next video:
Loading the player...

Going from an hourly position to a salaried one often comes with a big pay raise. But there are some things to think about before celebrating.

If the Fair Labor Standards Act covers the job, it’s either exempt or nonexempt. Nonexempt workers get overtime wages for working more than 40 hours in a week.

However, an employer doesn’t owe overtime to an exempt employee no matter how many hours she works. In general, exempt employees must earn at least $455 per week on a salary basis and perform exempt duties, such as managerial tasks.

In addition to receiving overtime, hourly employees find it easier to separate home and work, enabling them to devote free time to family and hobbies.

But hourly employees’ hours are reduced when their company struggles. The Affordable Care Act requires businesses with 50 or more employees to provide health care to workers who log 30 or more hours a week. Businesses can cut hours to avoid the mandate.

Salaries provide consistent paychecks and more security. It’s easier to cut hours than renegotiate a salary. Full-time employment also comes with benefits, like retirement contributions and paid vacation.

But salaried employees work longer hours with no overtime, and may struggle to separate work from personal life. An hourly position is often better for someone who values leaving work at work.

  1. No results found.
Related Articles
  1. Personal Finance

    Salary versus hourly: How benefits and laws differ

    Before you decide on hourly pay versus salary, you should consider the pros and cons and be aware of how changing laws could affect you.
  2. Investing

    Bed Bath & Beyond Sued for Shorting Overtime Pay

    Home goods retailer Bed Bath & Beyond (NASDAQ: BBBY) is being accused of shorting employee wages by not paying them for overtime worked. Proposed class-action lawsuits have been filed in New ...
  3. Personal Finance

    Careers With Declining Salaries

    Whether due to the economy or increased competition, these careers are coming with lower and lower salaries.
  4. Financial Advisor

    The Cost Of Hiring A New Employee

    Hiring a new employee means more than just a salary ... a lot more.
  5. Personal Finance

    What Drives Investment Banker Salaries

    Do investment bankers make too much money? Are their salaries completely arbitrary or is there some logic behind it?
  6. Personal Finance

    More Bans on ‘What’s Your Salary?’ Job Interview Question

    These bans are becoming more common in the public sector, but it may take time for the private sector to follow suit.
  7. Small Business

    Counterintuitive Management Strategies That Work

    Traditional ideas are falling by the wayside, and being replaced by flexible arrangements and a results-oriented approach.
  8. Managing Wealth

    Top 5 Ways to Retain Your Best Employees

    You need to think beyond salary to make the most talented people want to stay on for the long term.
  9. Personal Finance

    Which Financial Careers Pay The Most?

    There are many job that can be considered "working in finance" but some definitely pay more than others.
  10. Personal Finance

    Why Low-End Jobs Are Paying More

    More companies are now paying employees in low-end jobs higher wages. Here is why – and who benefits.
Trading Center