A salary is a specified amount of money paid to an employee per pay period, rather than a variable amount that depends on hours worked. Depending on how an employer classifies a job, the salary may or may not include a regular hourly rate. If it does, workers need to know how to calculate their hourly rate because it can affect how much pay they receive.
Some salaries are exempt from the provisions of the Fair Labor Standards Act, in which case federal law does not restrict the number of hours an employee works. She must receive the full salary as long as she works any time during the week, but there is no hourly wage rate. As of 2013, an exempt employee must earn at least $455 per week. If an employee is not considered exempt, she is covered by special FLSA minimum wage and overtime rules for non-exempt workers.
Regular Hourly Rate
When a worker earns a non-exempt salary, the employer must state a regular hourly rate and the number of hours per week he is expected to work. This hourly rate must equal at least as much as the federal minimum wage, which was $7.25 per hour as of 2013. Employees calculate their regular hourly rate by dividing the weekly salary by the expected number of expected work hours. For example, if the weekly salary is $525 based on a 35-hour work week, the regular hourly rate equals $15.
Actual Hours Worked
The FLSA does not prevent employers from reducing the pay of a non-exempt worker if she works fewer than the expected number of hours in a week. She must receive her regular hourly rate for the hours she does work. However, some state governments require non-exempt employees to receive their full salary when they work fewer than the expected number of hours. On the other hand, if a non-exempt employee works more than the expected number of hours, but not over 40 hours in a week, she does not have to be paid for the extra time.
When a non-exempt salaried employee works more than 40 hours in a week, the FLSA says he must be paid his regular hourly rate for all time worked up to 40 hours and 1.5 times his regular hourly rate for time worked over 40 hours. This rule applies regardless of the number of hours he is expected to work. Suppose he is expected to work 35 hours a week and earn a non-exempt salary of $525 a week with a regular hourly rate of $15. If he works 44 hours one week, he must receive $15 times 40, or $600 for the first 40 hours. In addition, he must be paid 1.5 times $15, or $22.50 per hour for the four overtime hours. This brings his pay to $690 for the week.