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Most employees are either paid on an hourly or salary basis. An hourly employee receives payment according to how many hours worked during the pay period. A salaried employee generally receives a set amount in a given period no matter how many hours she works. A number of other regulations apply to salary employees.
Salary basis means that the employee receives a guaranteed minimum amount of pay each pay period. The amount can be all or part of her pay. Unlike an hourly employee’s income, which can fluctuate each payday, the employee’s salary stays constant unless she has a pay or deduction change.
The Fair Labor Standards Act (FLSA) is the federal law that sets the standards for which employees are labeled as exempt or nonexempt. An exempt employee is excluded from the FLSA overtime pay requirements; a nonexempt employee is not. While most salaried employees are exempt, a salaried employee can be nonexempt. If the salaried employee does not meet the FLSA exempt criteria, he’s salaried nonexempt and qualifies for overtime.
The employer must pay a salaried worker her entire salary, regardless of days or hours worked. If she performs no work for the workweek, the employer does not have to pay her for that week. As long as she is ready, willing and able to work, she is entitled to her full salary, even if little or no work is available.
The employer can deduct from salary if the deduction is permissible. Allowed deductions include offsetting amounts for jury duty or witness fees paid to the employee; overuse of benefit days, such as personal or vacation days; unpaid suspension for violating a major workplace safety or conduct rule; uncompensated leave taken under the Family Medical Leave Act; and during the first or last week of employment if the employee does not work the entire week. The employer can deduct in full-day increments only. If the employee takes 3 1/2 days off, for example, the employer deducts for three days only.
Employers are not required to keep a record of hours worked for exempt employees, only for nonexempt workers. Still, the employer can require that all employees clock in and out, if it wants to. Many employers do not require salaried exempt employees to use a time clock, since they are not eligible for overtime and are not paid according to hours worked.
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.