You might be wondering if there is a difference in paystubs between salaried and hourly employees. This article gives a point by point comparison of the two.
Salary vs. Hourly Rights
As an hourly employee, you have rights given to you by the Fair Labor Standards Act (FLSA). These include mandatory overtime pay for hours over the 40 hours per week and a minimum wage that you must be paid, which is determined by your state. The majority of salaried employees are exempt from these rights but must meet certain requirements first, including:
- Being ineligible for overtime.
- Have a minimum yearly income, regardless of hours worked.
- Performing FLSA outlined job duties.
Let’s take a closer look at FSLA laws.
Minimum Wage
The FLSA mandates that hourly employees be paid a minimum wage. These wages are determined by the state in which you are working. South Dakota has a minimum wage of $9.10, while Texas has a minimum wage of $7.25.
There are certain circumstances where employers can pay less than minimum wage, such as occupations that receive tips. States set minimum cash wages for these types of occupations. The minimum cash wage in Texas is $2.13, while in South Dakota, it is $4.65. While salaried workers don’t receive a minimum wage per hour, most states require that they make at least $455 per week.
Overtime
To be eligible for overtime, an employee must work a predetermined number of hours every week. Most states require 40 hours. If an employee works more than 40 hours in a week, they must be paid at least 1.5 times their normal hourly rate for every extra hour worked. For example, if you make $10.00 an hour, your hourly overtime rate is $15.00.
Salaried employees are not eligible for overtime pay. They are being paid to do a job until it is complete, regardless of the number of hours it takes. They could work 50 hours one week and 30 the next, but they get paid the same amount.
Job Duties
Salaried employees are required to perform what are called high-level jobs as determined by the FLSA before they can be exempt from their rights. Some of the job duties defined by the FLSA include:
- Managing two or more employees regularly
- Participating in interviewing and hiring new employees
- Setting the pay rates, hours, and job responsibilities of other employees
- Delegating work
- Ensuring safety in the workplace
To be exempt, these job duties must be part of the employee’s primary role. An employee can be salaried as long as wage requirements are met, but if they do not have high-level job duties, they are not exempt. Meaning they still have their rights in accordance with the FLSA. In short, salaried employees are not limited to management, but exempt employees are.
How to Calculate Gross Income
There is little difference between a salaried and hourly paystub. The main difference is in how the gross pay is calculated. Gross pay is the amount earned before any deductions and taxes are taken. The amount remaining after taxes and deductions is the net pay.
To calculate the hourly gross pay, simply multiply the number of hours worked by the hourly wage.
Regular Example:
Employee works 40 hours at a rate of $10 per hour
40 hours x $10.00 per hour = $400 gross pay
Overtime Example:
Employee works 50 hours at $10 per hour
40 regular hours x $10 per hour = $400 regular gross pay
10 overtime hours x $15 per hour = $150 overtime gross pay
$400 regular gross pay + $150 overtime gross pay = $550 total gross pay
To calculate salary gross pay, divide the total yearly salary by the total number of pay periods.
Weekly Pay Period Example:
Employee makes $40,000 per year
$40,000 annual salary / 52 pay periods = $769.23 weekly gross pay
Bi-weekly Pay Period Example:
Employee makes $60,000 per year
$60,000 annual salary / 26 pay periods = $2307.69 bi-weekly gross pay
Why You Should Track Hours for Salaried Employees
While salaried employees don’t get paid hourly, it is still important to keep track of their hours. Tracking the hours of a salaried employee helps to evaluate the workload. This way, you can make adjustments as needed, so they are not under or overworked. It holds the employee accountable for their work and keeps them productive. Tracking hours also helps with client billing and avoiding FLSA wage and hour lawsuits.
It is a good idea to include the hours tracked on the employee’s paystub. This way, you are both in the know and on the same page.
Generate Your Own Paystubs
Whether you have a salaried or hourly employee, you can easily use our paystub generator to create accurate and authentic paystubs at a low cost. We make the process easy. All you have to do is enter the information, preview the paystub and ensure you didn’t make any errors, and download your paystub. That’s all there is to it!
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