Going from an hourly position to a salaried position may be beneficial for you as an employee or an employer – depending on the job. Hourly is typically for non-exempt employees, meaning they get paid for working overtime; salaried employees are usually exempt. If you're not in a situation where overtime is a major consideration, then going over to a salaried position may be beneficial.
Moving into management with added responsibilities often comes with the opportunity for a salaried position. Individuals who are not ordinary employees who supervise the work of other workers and may have the ability to hire and fire others, are typically eligible for salary.
Consider the following: an employee chooses an hourly position because he knows he will be able to work 60 hours a week with overtime and earn $50,000 a year over a salaried position in which he will work 40 hours a week and earn $40,000. The hourly worker in this instance is earning a little over $17 an hour, but the salaried worker is averaging over $20 an hour. What's more, the hourly worker earning over $23,600 a year is exempt from overtime protection by the Fair Labor Standards Act (FLSA), meaning employers do not have to offer overtime pay.
A study conducted by researchers from the University of Toronto and Stanford University found that hourly and salaries workers feel differently about money. Using data from a nationally representative survey, the researchers reported that salaried workers separated their feelings of happiness from money, while the happiness of hourly workers was tied to their income. The changes in income for hourly workers created more anxiety.
For employers, moving an employee from an hourly to a salaried position can be ideal if the employee earns over $23,600 a year. Firstly, employers don't have to worry about paying salaried employees overtime, which is usually time and half for hourly positions. Secondly, because the FLSA doesn't guarantee rights for non-exempt employees, the employer can require salaried employees to work overtime without the extra pay. Though salaried employees are guaranteed a base pay, employers may create work schedules that compensate for time lost during absences or slow periods. Mandatory overtime is not restricted by the FLSA, so long as the total amount of hours worked divided by the period pay check doesn't translate to less than minimum wage.
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