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What is the Difference Between Being Paid Hourly vs. Salary?

Getting a paycheck every week or every other week usually provides peace of mind to employees — it makes them feel accomplished, comforted knowing they can pay for bills and groceries, or excited to put money towards savings. It’s critical for employees to know, though, whether they are getting paid a salary or on an hourly basis. While it may seem like getting paid is better than not getting paid (which it is!), knowing how you’re getting paid could make a difference in the amount of your take-home pay.

Salary Pay

When someone is paid through a salary, this means that the employee is paid a certain amount for the entire year, evenly spread out between paychecks. For example, if an employee has a salary of $50,000 and is paid every two weeks, their paycheck before taxes and other reductions would be around $1,923.

An advantage of a salaried position is that companies who offer this usually offer more benefits to employees, such as 401K plans, health insurance, and more. Additionally, there is no question about what your paycheck will be each occurrence as the take-home pay should not change paycheck to paycheck.

There are some drawbacks to having a salary, though. Salaried employees are not paid overtime. This means that even if an employee works more than 40 hours a week, they will not be compensated for the extra hours worked.

Hourly Pay

Being paid hourly means that an employee’s pay is based on a certain monetary value per hour. For example, if someone makes $15 per hour and works a 40 hour work week, they will make $600 per week before taxes or other reductions are taken out. A significant advantage of hourly pay is compensation for overtime. If an employee works past 40 hours per week, they will be paid for those extra hours worked (usually at a rate of their normal pay plus half of their normal pay, also referred to as time-and-a-half).

The con of an hourly position, however, is what makes a salaried position desirable for some. Hourly positions do not always offer the same benefits that salaried positions do. Additionally, many hourly positions do not have a set schedule. This means an employee could be working Monday through Friday one week or Monday, Tuesday, Thursday, Friday, and Saturday the following week, for example. Hourly employees are also unable to regulate their pay as much as salaried employees can, especially if an hourly employee works a lot of overtime one week and not a different week.

Am I Being Properly Compensated?

Your employer isn’t going to go out of their way to make sure you are being paid properly, especially if there is a potential error on their end that is causing your paycheck to be less than it should be.

If you are an hourly employee and are not being paid for overtime worked, you have the right to seek out proper compensation. The lawyers at Cohelan Khoury & Singer are ready to help you. Contact us today either online or by phone to get started — (800) 724-4157.