What is hourly rate

Even if a salaried job with benefits pays less than an hourly job, it could put you in a better financial position. Perks such as maternity or paternity leave, gym membership reimbursements or free childcare can provide significant savings.

Generally, a salaried position comes with more responsibilities than an hourly job. Even if you accept a pay cut to move from an hourly to a salaried role, it could be worth it in the long term. In addition to added benefits like health insurance, you could be promoted to a more advanced position more quickly than an hourly employee.

Management roles, for example, are typically required to be full-time employees. Per federal law, businesses have to pay hourly employees overtime for hours worked in excess of 40 hours per week. They can still require salaried employees to work as long as it takes to get the job done. Working an hourly position can certainly be more beneficial in some cases. Here are some benefits to receiving hourly wages:. Most businesses use a time tracking system that pays employees by the minute, so, if you receive hourly pay, you should be compensated if you need to stay at work late.

Since federal law requires overtime for hourly employees, you could make hundreds of additional dollars per week if your job needs you for more than 40 hours a week during a busy time. If you work in a field where overtime is common, you may earn more than you would if you had a salaried position with comparable pay. Overtime work and the extra pay associated with it is not necessarily guaranteed.

You should make sure that it and any other promised benefits are part of your contract before you accept a job offer. Having an hourly position allows you to schedule for other interests like improving skills, going to school, starting your own venture or working another full or part-time job. The income of an hourly employee might be more vulnerable to changes.

Hourly positions typically feel the impact of a poor economy or economic downtown in their industry first. Many businesses choose to reduce the hours for hourly employees instead of laying off salaried employees. Hourly employees can also be affected by missing their scheduled hours. While a salaried employee will have a somewhat flexible schedule that typically allows for sick days and paid time off, an hourly employee must arrive and clock in on time to start their shift.

The Affordable Care Act requires businesses with 50 or more employees to help pay for health insurance for those who work 30 or more hours per week. Some companies have chosen to avoid this obligation by keeping each hourly employee from working more than 29 hours per week.

If your employer decides to reduce your hours permanently, you could have to find a second job or an altogether new position. To learn about how we use your data, please Read our Privacy Policy. Necessary cookies will remain enabled to provide core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

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Popular Courses. Part Of. Agencies and Entities. Employment and Pay. Unemployment Protections. Health and Safety. Unions and Right to Work. Key Takeaways Salaried employees receive a fixed wage, but they must keep up with their responsibilities and complete necessary tasks—even if that means working extra hours. Hourly employees must be paid time and a half for any hours beyond 40 worked during a week. In the U. Salary vs. Hourly: Key Differences Salary Hourly Guaranteed weekly wage Pay varies based on the hours you work No overtime pay Overtime pay of time and a half for each hour worked after 40 hours Employer-sponsored benefits such as healthcare coverage and paid vacation and sick days May be responsible for own health insurance and not paid except when working Harder to separate work from personal time Can leave work behind when not on the job Salary comes with a sense of job security Employers can more easily cut your hours when they choose to.

Article Sources. Investopedia requires writers to use primary sources to support their work. Compensable Time. Compensation Philosophy. Compensation Strategy. Employee Benefits. Executive Compensation. Final Paycheck Laws. Geographic Pay Differential. Gross Pay. Incentive Pay. Job Classification. Lag-the-Market Compensation Strategy. Lead-the-Market Compensation Strategy. Meet the Market Compensation Strategy.

Net Pay. Pay Adjustment. Payroll Records. Salary Basis Test. Salary Expectations. Salary Range. Salary Survey. Sales Compensation. Tuition Reimbursement. Posts You Might Like.

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