Most jobs in the United States are governed by the Fair Labor Standards Act (FLSA) and are classified as exempt or nonexempt. Learn the scenario of Salary vs Hourly based on time limit.

If you are not exempt, you are owed overtime wages, which are 50% higher than your regular pay rate, for any hours beyond 40 worked in a single week. exempt employees do not receive overtime pay.

What makes you exempt? In general, an employee must earn at least $ 455 per week ($ 23,660 per year), receive a salary, and perform exempt duties that require discretion and independent judgment at least 50% of the time.

if you take on management duties, for example, you are probably exempt. This means that you can be paid a salary, so no matter how many hours you work, your employer does not have to pay you for overtime.

Salary

Every time your paycheck arrives, it's the same. An annual salary is a term of your employment, and that is the amount you will receive for as long as you have the same job or until the terms are renegotiated. It is a type of implicit cost.

A salary comes with an inherent sense of security. Employers can cut non-exempt hours easily, but renegotiating a salary is more difficult.

However, there may be a downside. While salaried employees receive a fixed rate of pay, they also have specific responsibilities and tasks that need to be accomplished or completed, even if that means more hours and occasional weekends.

In some circumstances, this can make it more difficult to separate work and personal time.

Hourly

As an hourly employee, you are paid for all the hours you work. If an employer wants more of your time, they have to pay you more.

the legal overtime is time and a half; Some employers may pay double for vacation, but that is not required unless it is part of a contract that covers your work.

If you are in a high paying field with a lot of overtime, you could bring home more than if you were earning the same official salary on a salary basis.

There is also a lifestyle aspect. In general, hourly employees will find it easier to separate home and work. Once work for the day is over, they can focus on family, hobbies, or a second job.

Unfortunately, getting paid by the hour also makes you more vulnerable. When laws change or the company is going through tough times, hourly employees often feel the impact first.

it is easier for an employer to suspend some of their hours until business improves than it is to eliminate an entire salaried position.

There are also possible effects on eligibility for health care coverage.

Companies with 50 or more employees are required to provide health care to people who work 30 or more hours, so some companies keep hourly employees under 30 hours to avoid the mandate.

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