Beginning next week, I will be promoted at work, and as part of it, I will get a raise, become “exempt”, and be paid “salary”.
On paper, it’s a nice raise. But after some figuring, compared to what I made last year with overtime, it only works out to $51 a year.
What are some upsides to being paid salary instead of hourly?
Man, I hope it’s more than $51 a year. The only other benefit to being salaried vs hourly is that at my job at least, the focus is more on have I done my job instead of have I been here 8 hours or not. I like it more. But yeah, you lose out on the overtime, which if you were putting in a bit of overtime, might be why they moved you.
I hope I’m figuring it wrong, too.
I took my last paycheck, which included categories such as:
looked at the final YTD earning column, which had the pre-tax figure.
I compared that to what they said my current salary would be, and it was only $51 more.
There’s got to be something I’m missing…
Usually with a salaried position you get paid when you are off sick. (Up to a certain point anyway) Hourly, you don’t.
People who rank jobs with some notion of prestige will almost always rank salaried positions higher than non-salaried ones. If you were one of those people, that would be a major benefit.
Other than that, your average salaried job will translate to higher pay, even if your hourly wages drop (and now that you’re exempt from overtime laws, they very likely will). Give it a couple performance review cycles and you’ll see more than a $51/year raise.
Salaried means you can goof off and still get paid. Technically.
Depending on your local laws, what it usually means is your boss can make you work lots of overtime without compensating you for it.
In most of the places I’ve worked, salaried people get benefits and hourly people don’t. For me, the benefits counted as a huge raise. Insurance, death benefit, etc. Not to mention paid annual and sick leave.
I actually went from salaried to hourly and found hourly was much better. Hourly workers have a lot more legal protection from exploitation, where salaried positions tend to be seen more as “management” and are therefore pretty exposed. In the salaried position I ended up working about 15 hours a week overtime on average - totally uncompensated. In the hourly position if I was given more work than could be done in 40 hours, overtime kicked in which mean either I’d get a windfall or my boss would think twice about giving me the extra work. Legally I couldn’t say “oh I’ll work an extra hour or two gratis” just to please my boss, since they’d be liable to pay me for that work whether or not I’d agreed to do it for free. (Not to say some employers like WalMart have tried that anyway). The downside to hourly though is that you’re much less flexible about when you do the work. No saying “I’ll get this done on the weekend and take a long lunch now.”
Also, if you do not like working that much overtime and would prefer to have an outside life, salary is a greater increase. If you’ll still be putting in the same amount of hours, then you’re losing out on the promotion (IMNSHO).
In theory, what’s missing is that you’ll be paid your salary based on working a 40 hour week.
In practice, if you continually work overtime, then you’re probably right - you’re not making more money.
Think twice about how much overtime you put in. I’ve always worked salaried jobs, and I make an effort to not work overtime unless it’s the last few weeks of a project that requires overtime to get it done on time. Otherwise, I’d be working 60 hour weeks all the time.
I’m guessing that’s the way it is in Canada, but not in the U.S. Most Full-Time/Permanent workers are entitled to sick time & other benefits, if their employer offers them to anyone (which they aren’t legally required to do).
The main difference between hourly and salaried is that a hourly person punches a time clock (or equivalent) and is paid for the actual time worked, including legislated overtime pay for time worked over 40 hours in a week, while salaried workers are paid a fixed rate per pay period, regardless of the number of hours spent working - with certain caveats.
For instance, if a salaried person does not work at all in a day, they can be docked - though usually it’s from their vacation/sick time/paid time off balance. However, if said salaried person works even a fraction of a day, they can’t be docked - so they can save themselves a lot of usage of PTO for doctor’s appointments, personal errands, etc., by simply putting in a minimal appearance.
That’s the upside. The downside is the previously mentioned lack of overtime pay for work over 40 hours in the week. So it depends on how much work you will have to do. Most salespeople I know of that are salaried in addition to commission on sales goof off considerably, so they are being paid to do so. If you’re a salesperson, don’t take this personally - it’s just the case with the ones I know.
That’s not been true most of the places I’ve worked. If you’re gone more than an hour or two, it comes out of sick leave/paid time off/etc. If it’s only a couple hours, you’re expected to make it up by staying later/working through lunch/coming in on the weekend. I’ve always had to put in 40 hours or use some of the various types of paid time off to make it up.
If you check the IRS’ website, definitions of “salaried/exempt” employees, you’ll find that that is illegal.
However, that doesn’t mean it doesn’t happen.
That isn’t always true though. I am a consultant and I bill by the hour even though I work at the same place every day. Lawyers and some other prestige professions do the same.
I like my job in that it is pure capitalism and straightforward. I work an hour and get paid for an hour. Actually my rate works out to be much more than I would get as a straight salaried employee because I don’t get benefits.
I have to work most of the night tonight and Monday morning I will submit a big honkin’ bill for it. I have had salaried jobs that required the same thing and you get nothing then. I suppose it is a trade-off.
I am certainly higher ranking than the regular employees in the groups that I work with. They can visualize the dollar signs blinking when I work on something so I tend to get some challenging and important work.
As YaWanna says, in the U.S., this is not legal.
I went from hourly to salaried a while ago, and the biggest advantage is the elimination of the micromanagement of time. I work a 45+ hour week typically, but there are occasional weeks when it’s slow and I’m less than 40. More importantly, I can duck out for a doctor’s appointment or some other partial day, and it doesn’t affect my pay.
Salaried people report time in full day increments, period. That’s the law in the U.S. You get screwed on the overtime, but you get it back by not having to worry about what you’re doing every minute.
Is this a promotion to management? If so, do you now qualify for a bonus? Corporate profit sharing? Keys to the executive restroom?
In my case, being salaried means more flexibility. It means not getting written up if you’re 15 minutes late once in a while. It means being free to leave the office when your work is done, rather than waiting for the whistle to blow.
But most upper management will tell you it means a chance to guide the company’s direction and help manage its material assets and resources. Your personal success becomes more directly linked to the company’s overall success.
If you really don’t see what you’re getting out of the promotion, why did you take it? What is the company’s stated incentove for the hourlies to strive for promotion (assuming it’s not the money, as $51 doesn’t seem like much of an incentive to me).
When I moved from hourly to salary it wasn’t a promotion, it was a change of my position (at that time) from union-represented to exempt. Some of the benefits were better (the company started matching my 401(k) up to a point, the medical benefits were a little better), I didn’t have to pay union dues, and since I didn’t work a lot of overtime before, it was a nice increase. Unfortunately, I have put in lots of unpaid overtime as a salaried worker in the years since then, so it has been a decidedly mixed blessing. But at least I can plan for whole year exactly what my income will be. And my annual increases aren’t tied to a union contract.
Yes, the lowest rung of the mamagement ladder, but my job title now includes the word “Manager.” Yes. Yes, everyone does here, but my share is bigger. What is this “washroom” you speak of?
I wasn’t asked. They just said “Hey, good news, Paul! You’re exempt! No more OT, but look at this raise!”
I admit, I saw dollar signs at first, dig the new title, and while the job responsibilities won’t necessarily change, I’ll be more of an “authority figure” I guess.
I’ll also have to be even more on the sly about surfing the net during business hours. 
Naw, that’s not it - I’ve been an hourly worker for 10 years and I get sick time, vacation time, health benefits, life insurance, disability insurance…
Obviously, this differs from one company to another.
It really depends on the company. At my last job, I worked salary. While there were weeks where I worked sixty plus hours a week, my average was 36.5 hours/week. The hours I worked weren’t important, what I got done was. When I lived 67 miles away, I usually left at 3:30 Fridays instead of at 5:00. They didn’t care because my job was done.
Salary vs. Hourly was a cost/benefit analysis; What I lost was less then I made. Each employer is different…ask yourself, “is what I’ve gained worth more then what I’ve lost”
If the answer is no, then you’re getting screwed.
Peace - DESK