Definition: A salaried employee is a person who receives a fixed and regular compensation for the services provided to the company regardless of the time it takes to perform the services. In other words, it is an individual entitled to a predefined payment not based on an hourly rate.
What Does Salaried Employee Mean?
Salaried employees normally work full time (at least 40 hours per week) and have a broad set of responsibilities. These responsibilities are commonly related with business administration activities. They are also referred to as exempt employees, which is a status set by the Fair Labor Standard Act (FLSA).
This status eliminates the possibility of getting paid for overtime hours since the salaried employee functions are defined as administrative and non-manual. This is the main difference between salaried employees and hourly employees. Hourly employees are are indeed entitled to overtime pay since they are paid on a per-hour-worked basis.
Nonetheless, there are some exceptions to this overtime rule for salaried employees. If the employee’s job description meets a set a of conditions the person might be entitled to an overtime payment of 1.5 times his regular hourly rate for each additional hour worked, although, this is rare.
Let’s take a look at the following example.
Loud Instruments Co. is a company that manufactures musical instruments for both beginners and professionals. The company has two jobs available right now: one is for a press machine operator and the other one for a marketing analyst. The Press Operator will get a $15 per hour and the Marketing Analyst position will be paid a monthly salary of $2,500.
According to our previous definition, a salaried employee is a person that receives a fixed regular compensation for the services provided. By observing both positions, we see the Press Operator will get an hourly rate for his services. This means that he will be classified as an hourly employee according to the FLSA definition. On the other hand, the Marketing Analyst fits our definition of a salaried employee since he is paid a monthly rate regardless of the number of hours he works.