Hourly vs Saleried: Are You Losing Money?

By | Aug 31, 2009

Creative Commons License photo credit: Tracy O

Money!If you are improperly classified as a salaried employee, you could be losing a lot of money.

In big corporations, whether you’re an hourly or salaried employee is usually a decided by HR in order to comply with labor laws.  However, many small businesses don’t have an HR employee, much less a whole department, and it isn’t unusual to find administrative support personnel classified improperly.  I know that I’ve worked for several small businesses and non-profits over the years that classed me as a salaried employee, most likely incorrectly.  However, since I’m weird and like being salaried, I never argued with it.

Whether or not an employee must be paid overtime is governed by the Fair Labor Standards Act (FLSA).  FLSA contains guidelines covering which employees can be considered exempt from overtime pay.  (For an overview of exemption rules, click here.)  Essentially, for administrative personnel to be considered exempt from overtime pay, they must meet the following criteria:

  • The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
  • The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
  • The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
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As far as Executive and Administrative Assistants are concerned:

An executive assistant or administrative assistant to a business owner or senior executive of a large business generally meets the duties requirements for the administrative
exemption if such employee, without specific instructions or prescribed procedures, has been delegated authority regarding matters of significance.¹

If you believe you’ve been wrongly classified as a salaried employee, first discuss it with your employer.  If your company has an HR department, call them and ask them to look at your classification.  If your company maintains that you should be salaried, you can call the Wage and Hour Division to file a complaint.

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4 Comments so far
  1. Travis @ Best ATS (1 comments) September 24, 2009 5:38 pm

    Most managers are salaried employees but a lot of them do hourly wage work. Just observe the managers in starbucks, mcdonalds etc.. for one whole day. You’ll see that most of them spend a considerable amount of time doing manual work. I’ve heard a lot of stories wherein managers filed complaints and were awarded settlements.

  2. Jodith (189 comments) October 23, 2009 1:23 pm

    It’s true. With the changes in FLSA a few years ago, companies are having to take a good hard look at some of their employment policies around wage and hour.

  3. MHL Employment Law Specialists (1 comments) June 2, 2010 12:57 am

    Fabulous post and information that the majority of people don’t know
    .-= MHL Employment Law Specialists´s last blog ..Introduction =-.

  4. Job Search Portal (1 comments) August 10, 2010 8:08 am

    Its the fault of the capitalists, as long as they earn, they don’t care.
    Job Search Portal´s last blog post ..The Ups and Downs of Working At Home

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