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How Are Hourly and Salary Wages Different?


Different policies and laws outline hourly and salaried employees. Each employee falls under a classification, depending on the type of work they perform and how they get paid.

Salaried employees are employees paid every week, every two weeks, or once a month with a fixed amount of money determined by the employer. Hourly workers receive pay based on the number of hours they work. State and federal law require every employee to fall under the hourly or salary classification.

Working as a Salaried Employee

The amount of money a salaried employee receives depends on their annual pay even though they receive paychecks weekly, biweekly, or monthly. The employer determines the pay periods of the year and divides the annual amounts between each period.

Salaried employees receive an employee contract indicating the amount of pay and time they can expect to receive their pay. Typically, an employee receiving a salary:

  • Does not have to keep track of the hours they work or complete a timesheet
  • Receives benefits, such as a 401(k) plan
  • Could work more or less than 40 hours a week but does not receive different pay based on their hours
  • Has more job security and opportunities to advance within the company in most industries than other types of hourly jobs

Advantages and Disadvantages of Salaried Employees

Salaried employees typically have access to a range of benefits that hourly workers don’t receive. Benefits can include:

  • Paid time off
  • Medical, dental, and vision insurance
  • 401(k) plan

Workers being paid a salary might also have an opportunity to receive bonuses and annual raises.

Overtime is one major disadvantage for salaried employees. Many employers paying someone a salary won’t pay extra if that person works above 40 hours a week. Some employees end up working more hours for the same amount of money. These additional hours could include holidays and weekends.

Working as an Hourly Employee

Hourly employees receive a paycheck based on the number of hours they work and the predetermined amount of money for each hour. The circumstances of hourly positions can include:

  • Pay for the hours worked
  • Standard 40-hour workweek
  • Anyone working less than 40 hours per week is typically a part-time employee instead of full-time
  • The employer sets schedules and how many hours their hourly employees can work
  • Employees must complete a manual timesheet or use a digital system to record their hours
  • Pay rates and benefits differ between part-time and full-time workers
  • The Department of Labor and state laws require employers to pay hourly employees overtime if they work more than 40 hours in one week

Advantages and Disadvantages of Hourly Employees

One of the most significant differences between an hourly and salaried employee is hourly employees often receive additional wages for working overtime and on holidays. Being paid for overtime often results in a higher annual wage than usual.

Unfortunately, many companies don’t provide benefits to hourly employees, particularly if they only work part-time. Hourly employees are not entitled to health insurance unless they work full-time at a company with at least 50 full-time employees. Additionally, there isn’t a state law requiring employers to provide time off for vacation for an hourly employee. However, every employer is different and will use their discretion to determine how they want to handle this situation.

Contact Wagner Zemming Christensen, LLP

If you are an hourly or salaried employee and your employer violated state laws, Riverside attorneys at Wagner Zemming Christensen, LLP can help. Every employee should receive fair treatment and the hourly or annual pay they deserve. Our attorneys can discuss your options for pursuing legal action for a wage violation in Southern California.

Contact Wagner Zemming Christensen, LLP today for your initial consultation to discuss your case and what we can do to help.

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