Hourly Employee

Hourly Workers - Questions Answered
Hourly Workers - Questions Answered. kevinjeon00/Getty Images

The old image of an hourly worker was a line of factory workers punching time clocks. Today, hourly workers come in many different types. 

Most workers are paid on an hourly basis, including workers in construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government. 

What is an Hourly Employee? 

An hourly employee is paid on an hour-by-hour basis.

It sounds simple, but it's a little more complicated than that. 

How Do Hourly Employees Get Paid? 

 Pay for an hourly employee is calculated as hours worked times rate. Employers are not required to pay hourly employees for time not worked, and there is no minimum number of hours a week that an hourly worker must work. 

All workers, both hourly and salaried, must be paid at least the minimum wage (currently $7.25 per hour), for all hours worked. 

Do Hourly Workers Have to Punch a Time Clock? 

Not necessarily a time clock, but all hourly employees must provide an accounting of their work hours for each week or two-week period. That accounting can be on a time sheet or electronic time sheet, but the account must be verified and is used for payment. 

Can an Hourly Worker's Wages Be Reduced Without Notice? Can an Hourly Worker Be Fired Without Notice? 

Hourly workers are considered at-will employees.

That is, both the worker and the employer can change the relationship at any time, with or without notice. Hourly employees typically do not have employment contracts, but some hourly workers have union contracts. If an employer is in financial difficulty, it might reduce wages or lay off hourly workers.

 

Of course, there are exceptions to the at-will employment doctrine. Employers can't discriminate against workers, or fire for whistleblowing or a number of protected activities. 

Do Hourly Employees Get Overtime? 

Overtime is a big dividing line between hourly and salaried workers. Hourly employees work in the types of jobs that classify them as non-exempt. That is, they are not exempt from overtime, and employers must pay overtime to hourly workers. 

The Fair Labor Standards Act (federal law) says that employers must pay hourly workers overtime if they work more than 40 hours in a workweek, and the overtime rate must be at least 1 and 1/2 times the normal hourly rate. Some employers choose to pay additional overtime at higher rates for work on holidays, for example, but this is not required by federal law. 

Are There Differences Between Full-time and Part-time Hourly Workers? 

A worker can be designated as full-time for several purposes, including by an employer for the purposes of benefits. A work week of 40 hours is considered full-time for the purpose of calculating overtime. 

Is an Hourly Employee the Same as a Non-exempt Employee? 

For the most part, hourly employees are non-exempt, as discussed above.

That is, they are eligible for overtime pay. Certain employees are considered exempt from overtime because of the types of jobs they do - executive, managerial, professional. 

What Benefits Do Hourly Employees Receive? 

In many businesses, hourly employees and salaried employees are not only paid differently but they may receive different types of employee benefits. For example, hourly employees may not be eligible for the same paid time off (sick pay, holidays, vacations) as salaried employees. Federal law does not require employers to pay for time off or for rest breaks. 

Are Hourly Employees Union Workers? 

It was true historically that union workers were mostly paid by the hour, but that's not really true today. Many salaried employees have formed unions, including public school teachers.

 

Can Hourly Employees Be Paid for Travel Time? 

Yes, if an hourly worker is required to travel or drive on business-related activities, at the request of the employer, travel time should be accounted for and included in the employee's pay. Employee travel expenses must also be reimbursed. 

Are State Laws for Hourly Employees Different? 

Each state in the U.S. has different laws from other states, relating to overtime, child labor, rest breaks, and other 

The U.S. Department of Labor has a website that includes links to state laws regarding hourly employees. 

 

In contrast to hourly workers, salaried employees are paid an annual salary and are considered to be exempt from overtime.