Hourly vs. salaried?

October 24, 2016 6:56 AM

What exactly does it mean to be paid hourly?

As you can probably tell from my post history, I am in the process of looking for another job. I am about to interview for a senior project coordinator position at an insurance company you've likely heard of (provided you're in the US). I'm interested in it, but I was informed during the phone screen that it's paid hourly. It appears to be full-time.

I have really limited experience with hourly paid positions that aren't in retail or food service. My current position is salaried.

Has anyone else here had a full-time position that paid hourly? What were the pros? The cons? Is this a red flag? Thanks in advance.

posted by Puck Soppet to Work & Money (21 answers total)

Hourly means that you get paid for the hours you work, and don't get paid for the hours you don't work. Generally, in an office job, your hours are already set (about 40 per week for most full-time folk) and you have to work out whether or not it's possible to get overtime. The company is required to pay hourly employees overtime, where they don't have to for salaried employees.

Generally, it has to do with the type of responsibilities you have in your position. Non-management positions are generally thought of as hourly.
posted by xingcat at 7:09 AM on October 24, 2016 [2 favorites]

Did the job actually indicate it would be at least 40 hours a week?

Perhaps they're trying to avoid offering benefits by scheduling the position below the 30-hour minimum required by the ACA.
posted by JoeZydeco at 7:12 AM on October 24, 2016

I've had a few full-time hourly positions, and a couple salaried, all in the architecture field. Aside from getting overtime for the hourly positions, I really couldn't tell you any difference between the two, other than that some differences will depend heavily on the organization you're working for. Generally, salaried positions are more for management level employees, and the expectation seems to be that you'll be putting in some time beyond 40 hours, but the compensation level of a salaried position is high enough to sort of make up for not getting paid overtime.

My two salaried positions couldn't have been more different. One firm was absolutely religious about scheduling and not having people work overtime (even salaried positions), to the point where when projects I was scheduled to work on were delayed, I'd sit there doing nothing because they didn't have anything for me to do, and they were fine with that. The other one routinely expected people to work 50+ hours a week, pulling 60 was not unheard of, and I didn't get anything extra for it. I honestly would have rather gone hourly at that position and taken a pay cut.
posted by LionIndex at 7:13 AM on October 24, 2016 [1 favorite]

If the position pays less than $47,476 per year, the company may just be ensuring that they comply with the new overtime rule going into effect in December.
posted by ND¢ at 7:19 AM on October 24, 2016 [12 favorites]

I've never had a full-time professional position that wasn't hourly. I'd actually be pretty hesitant to take a salaried position because my experience with hourly is that someone above you has to think good and hard about whether or not what you're doing is important enough to pay time-and-a-half for you to work overtime. Which is as it should be. My employer doesn't own me, my time is my own, and if they want some, they're going to have to pay for it. At my employer, no one wants to pay overtime (public university, money is very tight), so I am outta here at 5 PM every day, no exceptions. The very few occasions when I have to come in on a day I'd normally not (I'm in academic IT so if we have testing to do after an update on a Sunday a couple times a year, I'll come in for that), I get comp time rather than overtime. My husband is in the private sector and he does work a fair bit of overtime, but they pay through the nose for the privilege of keeping him around a few extra hours when needed. And they should.
posted by soren_lorensen at 7:20 AM on October 24, 2016 [22 favorites]

Federal employee here in what everyone here would consider a white collar job. We're hourly. It means a set of rules governing how you'll be paid for your work. It requires that overtime or comp time be paid for hours in excess of 40. Salaried means in theory you could be forced to stay beyond 8 hours a day until all your TPS reports are completed. No red flags, no cons that I can think of.
posted by fixedgear at 7:22 AM on October 24, 2016 [1 favorite]

At my company, most people with the title Project Manager are non-exempt (i.e. paid hourly and paid overtime when they go over 40 hours per week.) This is not a red flag at all. In fact, it is to comply with federal regulations about exemption. The terms seem a bit backwards to some people, but Exempt and Non-Exempt is referring to being paid for overtime. Exempt people are not paid for overtime and non-exempt people are paid for overtime.

I think the non-exempt pros outweigh the cons, but one con may be that your company can require that you put in at least 40 hours each week if you are non-exempt but they may be more flexible with an exempt employee putting in less than 40 one week and more the next week. The same might apply to 8 hours per day vs. 7 one day and 9 the next. That is going to vary by company and probably by division within each company.
posted by soelo at 7:33 AM on October 24, 2016 [1 favorite]

The company is required to pay hourly employees overtime, where they don't have to for salaried employees.

This is not quite true. Many people confuse "salaried" with "exempt" ["exempt from overtime pay."] If you are not legally exempt from overtime pay and you work more than 40 hours a week, you must be paid time and a half for those hours. Employers can't, for example, just hire a receptionist as a salaried employee and then have them stay late without additional pay.
posted by needs more cowbell at 7:44 AM on October 24, 2016 [4 favorites]

I've worked with a few folks who're hourly in white-collar, mostly-salaried contexts. The differences usually are:

* Hourly means "no benefits."
* Hourly means you don't get paid for days you don't work, ie no vacation
* Hourly sometimes implicitly means you're considered more disposable than 'real' salaried employees, particularly if you're still expected to be full-time.

Absolutely none of these are universal - plenty of people have hourly jobs and good benefits, and it's not uncommon for some holidays to be paid out or to accumulate some sick time or even vacation. But at a large insurance company where - I assume - most folks are salaried, those are the specific differences I'd look for.
posted by Tomorrowful at 7:53 AM on October 24, 2016

at a large insurance company where - I assume - most folks are salaried

This is not an assumption I'd ever make. In fact, I would be completely shocked if this were the case.

Other assumptions you definitely should not make:

Hourly status has nothing to do with benefits.
It has nothing to do with paid sick or vacation time.
It has nothing to do with how disposable an employee you are.

Most white collar workers are hourly. The bigger the organization, the more hourly and the fewer salaried positions there will be. Public institutions like the government and educational institutions, are stuffed full of hourly white collar employees, many of whom will be there for decades. There are labor laws surrounding who can and cannot be exempt from overtime (the main reason salary exists, though you can be on salary and be non-exempt I've personally never seen this in the wild) and you cannot just wave a wand and make everyone exempt from the CEO down to the receptionist--this is illegal.
posted by soren_lorensen at 8:21 AM on October 24, 2016 [6 favorites]

Some of the benefits at my company are clearly delineated based on whether you're exempt or non-exempt, mostly related to work schedules. Retirement, insurance, and other benefits like that are universal as long as you're working more then 20 hours a week.

The biggest difference we have is for time off. Exempt employees are allowed to flex time around a given pay period, whereas non-exempt are not. To make up for that, non-exempt are given a couple extra days of vacation time. Looking through the employee handbook, it seems that exempt employees also get a better severance package (4 weeks of notice versus 2 and extra severance pay).

Hourly employees are required to record their time worked to the nearest quarter hour, while salaried only have to log time to the nearest hour. Our hourly employees are usually on a different salary track as well, but I don't really know how substantial a difference that makes.
posted by backseatpilot at 8:23 AM on October 24, 2016

About half my jobs have been hourly and the other half salary. The biggest difference is that when you're hourly, you have to clock in or record your time in order to get paid while my salary positions just paid me. If I worked more than 40 hours a week I got overtime as an hourly employee. The benefits were the same, the paid time off was the same, my bonus as a salary employee was usually higher because hourly was for front line workers and salary was for middle management.
posted by fiercekitten at 8:27 AM on October 24, 2016

* Hourly means "no benefits."
* Hourly means you don't get paid for days you don't work, ie no vacation
* Hourly sometimes implicitly means you're considered more disposable than 'real' salaried employees, particularly if you're still expected to be full-time.

This isn't true. I'm hourly paid. I set my own full-time schedule. I have health and dental insurance, FSA options for health and daycare, 13 paid holidays, 23 vacation days/year, 140 hours of sick just given to me every year and accrument of up to 140 hours after I use some of the original 140, and a week holiday's pay between Christmas and New Years when my employer closes, and 9% matching on my retirement fund.

Professional hourly paid positions are not the same as in retail, food services, or temp agencies.
posted by zizzle at 8:27 AM on October 24, 2016 [6 favorites]

I'm hourly (non-exempt) and I actually wouldn't want it any other way. I do have benefits; I have paid vacation, holiday, and sick time, and I have medical insurance (plus retirement matching, pension fund, and disability insurance that I don't have to pay for). The benefits at each company are going to be different, so make sure you look carefully at them to see if they work for you. Like, we don't have flex time at all, not even the exempt employees.

The only downside (and it's really not a downside to me, I don't mind at all) is that I have to clock in and out. Not being able to take a lunch longer than an hour is such a minor inconvenience compared to being able to walk out of the office at 4:30 on the dot every single day. I love that. So much.
posted by cooker girl at 8:30 AM on October 24, 2016 [4 favorites]

This really does seem to vary quite a bit - as evidenced by the answers here. I think you should ask them about this. Not "What does hourly mean?" but several specific questions. Is 40 hours per week guaranteed? Are your benefits affected if the 40 are not guaranteed? What are the overtime policies? If they say none - how much overtime is the average person in this position working each week? Is that all voluntary?
posted by soelo at 8:33 AM on October 24, 2016 [2 favorites]

I am a non-exempt, salaried, full-time employee. That means I get full benefits (medical, PTO, paid Holidays, etc), and don't record hours, unless I go over 40 hours in a week. If I get approved to do that, I get paid 1.5x.

There is no legal difference between salaried and hourly wage jobs. The distinction is made on whether you are making "business decisions", or are doing supervisory tasks. This is why there are all the references to "exempt" and "non-exempt".

No one at my company seems to know why I and the people I work directly with are paid this way, other than perhaps "historical reasons" having to do with paperwork, but it's pretty sweet.
posted by ArgentCorvid at 8:39 AM on October 24, 2016

If the position pays less than $47,476 per year, the company may just be ensuring that they comply with the new overtime rule going into effect in December.

December 1 to be exact. This is having the effect at many companies of switching supervisory jobs that had been "exempt" into the hourly category. If the job were at $40,000, the company has the choice of raising the pay by $7,476 to make it exempt from overtime, or taking their chances on how much overtime would be involved. This may explain why your prospective employer is making this position hourly/non-exempt.
posted by beagle at 8:44 AM on October 24, 2016

I work in an industry that is generally white collar BUT we are all paid hourly. Sometimes there is heavy overtime and we get paid for it. We also get all the benefits you'd expect, including medical, dental, PTO, 401K. etc. Fantastic benefits, actually. So do NOT assume that because they are hiring you into an hourly position, they're trying to screw you. In my industry, it's the opposite. Overtime is nice ...

god I hate that "non-exempt" double-negative jargon they use
posted by intermod at 1:13 PM on October 24, 2016 [1 favorite]

An example: my wife and I work at the same fine institution. I am exempt AND salaried. The esteemed institution does not care how many hours a week it takes me to do my job, as long as grades are turned in at the end of the semester and I'm not cancelling every class every day. I can do my job in 20 hours or 60 hours, as long as it gets done. Conversely, I cannot get paid overtime or receive comp time - there is no such thing for my position, because I don't have to meet a specific number of hours a week. I am being paid for the job, not my time, as it were. The pros are that if I'm efficient and don't keep volunteering for more work (sigh) I can likely do my job in less than 40 hours a week (handy when you're also going to phd school). The cons are that I cannot make more money by doing more work without taking on more jobs (an overload, summer school, a job at another fine upstanding institution, etc). I miss overtime.

My wife, on the other hand, is hourly AND non-exempt. She is expected to work a 40 hour week; if she doesn't, and wants to get paid for 40 hours, she needs to take leave to fill up to 40 hours (or make up the time another week, in the case of our FUI). On the other hand, any minute she works over 40 hours is either overtime or banked as comp time, which is pretty sweet. In her case, she signed a statement agreeing to always take comp time instead of overtime (yay state budgets!)

I guess you could be hourly and exempt, but the salary would have to be amazing to compel me to do that.

Both sides have their pros and cons. Find out if you're going to get overtime, comp time, or have a choice in the matter. As what the comp time policy is - can you bank it, does it expire, etc.? (Some companies have policies which say you have to use comp time in the month you accrue it, so if you accrue it in the last working week of the month... so sad, too bad). And if you can possibly manage it, find someone who is willing to tell you honestly whether the company actually lets people take comp time or gets fussy when people try to take the time off.
posted by joycehealy at 6:15 PM on October 24, 2016

Hi, I work in Human Resources.

Where I am, "hourly" means precisely that - you get paid by the hour. You have to clock in when you arrive and clock out when you leave. You're expected to work at least 37.5 hours a week if you're full-time, but if you only work 37 hours, that's cool, but you'll only be paid for 37. If you work 38 hours, you get paid for 38. Et cetera. (You get time and a half if it's more than 40 hours.) "Salaried," on the other hand, means "we are going to assume you'll work about 37.5 hours each week and pay you a fixed rate, no matter how many hours you actually do work each week." Which is a bit more flexible in terms of personal schedule - but usually also screws you out of overtime.

Generally, the lower-level positions are the ones that are paid hourly, as they have a bit less responsibility/managerial stuff. Also, to correct something I saw upthread - it is possible to be paid on an hourly basis and get benefits (I know, because I am thus). The benefits packages vary widely company to company, but "whether or not you get benefits" usually depends more on how many hours you work (i.e., full time or part time) rather than depending on "are you paid hourly or salaried".

Oh, one other difference - sometimes working hourly will mean that there's a lag in the actual date you are paid for your work. What i mean is - suppose that I have two employees, one is hourly and one is salaried. My company has a two-week pay period; the first to the 15th, and the 16th to the 30th. Paydays are on the 16th and the 30th. The salaried employee works from the 1st to the 15th, and on the 16th, they are paid for the work they did from the 1st to the 15th. The hourly employee, however, needs to submit a timesheet for their work, and that timesheet needs to be reviewed and approved. So the hourly employee may also be working from the 1st to the 15th, but they won't be PAID for the work they do from the 1st to the 15th until the payday on the 30th. That particular detail is a little bit of a pain in the ass for someone who's just starting (becuase they may have to wait a month for their first paycheck), but they win out in the end, because if they leave the job, they get a last paycheck two weeks after they've already stopped working there.
posted by EmpressCallipygos at 6:48 PM on October 24, 2016

I'm exempt, but paid hourly... sort of. OPM's pay charts are annual, like a salary, but then they're divided down into an hourly rate.

It's assumed my work week is 40 hours (8 hours a day from x time to y time not counting lunch), and I have to account for all of that 40 hours. If I didn't work it, I need to have the approved leave to charge it to. If I work more than that, I get "overtime", which for me is actually just the regular rate, not 1.5x.

With that said, all the union's tedious rules about hours of lunch, approved shift times, and whatnot don't really apply to me as management, but for simplicity we use them as guidelines anyway. I could be treated differently with respect to forced overtime, but in practice we go by the union's volunteer/force choosing system unless there's a real good reason not to. If I want to come in early and leave early once in a while, that's usually ok with my boss as long as we get the records to reflect that correctly. My benefits are not affected by being exempt.

As soren_lorensen says, it's kind of nice. The way the accounting works, if I'm here, I'm getting charged to some project's budget. The project managers guard their budgets carefully and I'm expensive. There's not a lot of hanging around just for appearances. Critical urgent work or GTFO.

That's totally an excellent thing to ask about in your hiring interview and I wouldn't be offended at all if a candidate asked me that. I'd be impressed.
posted by ctmf at 8:18 PM on October 24, 2016