What Is Hourly to Salaried?

What Happens When an Employee Moves from Hourly to Salaried Employment?

Hourly Employee to Salary Employee Occurs Often in Manufacturing
Hourly Employee to Salary Employee Occurs Often in Manufacturing Jobs. Copyright DreamPictures / Getty Images

In organizations where hourly and salary employees are employed, people view a move from an hourly or nonexempt position to a salary or exempt position as a promotion. Is such a move right for an employee?

Most frequently, the answer to this question is: yes. But, the employee who receives or seeks such a position change needs to analyze the positives and potential negatives. Only after this analysis will the employee be able to look at the new offer and determine if it is the right move for him.

Advantages and Disadvantages of a Promotion to a Salaried Position

There are advantages and disadvantages for an employee to move from an hourly position to a salaried position. Foremost is the fact that employees who receive a salary are not generally eligible for overtime pay as defined by the Fair Labor Standards Act (FLSA). So an hourly employee who moves to a salaried position needs to consider this impact on their paycheck.

Usually, the salaried position pays enough more than the hourly position to make the loss of overtime pay inconsequential—but sometimes it does not. Additionally, hourly employees may have benefits, particularly in a union-represented workplace, that salaried employees don’t have. 

Plus, the union-represented employees often have protection for benefits such as their pension that exempt employees lack. 

Alternatively, many salary jobs have perks that hourly employees do not have.

These include more flexible schedules, leaving for  the doctor and other appointments without losing pay, and the ability to work remotely.

So the hourly employee needs to consider the whole compensation and benefits package including available perks before accepting the new job. There are likely advantages and disadvantages to each.

Organizations Have Different Expectations of Hourly and Salaried Employees

Organizations have different expectations of salaried employees. Hourly employees are paid hourly to produce a product or perform a task. Salaried employees have a broader job description that involves accomplishing a whole job usually with goals and outcomes that are less measurable than those of an hourly worker.

The hourly employee is paid for each hour worked with over time and even double time per hour for holidays at many employers. The salaried employee is expected to work the hours necessary to complete the job, no matter how many hours achieving the goals entails.

Certain differences exist because of the nature of the work, too. An hourly employee is finished with work when he or she goes home. There are no further expectations when the employee is off of the clock. In fact, it is illegal to have an hourly employee do any work off the clock without pay so employers must prohibit this.

The salaried employee thinks about the job frequently in the evening and on the weekend and may work on email at 10:00 at night. The employer may prohibit the nonexempt employee from making this contribution as the time invested in email is then paid overtime.

The salaried employee might write reports in the evening and spend the day on the phone. She might research potential employees online in the evening. Salaried employees are almost never on the clock and their compensation is for getting the job done.

One Final Thought About the Advantages and Disadvantages

People don't often talk about the nonfinancial aspects of moving from hourly to salaried employment, but they are substantial. In the average workplace, salaried or exempt employees get more respect than their hourly counterparts. They expect a certain amount of esteem that is attached to a salaried job. Employees are insulted if asked to move from a salaried job to an hourly job. It is a blow to their esteem and self-worth.

Salaried employees experience more freedom and autonomy than the average hourly employee.

They receive less direction and they are empowered to complete their whole job. They come and go as necessary to complete their job and this includes lunch and breaks as they desire, sitting at a desk when they want to, walking and talking at will. For the most part, they are the bosses, supervisors, managers and senior staff in their organizations.

So, employees considering a move from hourly to salaried employment might also want to consider the non-monetary benefits of such a career enhancing move.

When the Lines Between Salaried and Hourly Employment Blur

In an employee participative, empowering work environment, the lines between salaried and hourly functions blur with respect to responsibilities. But, an hourly employee moving to a salaried job most frequently takes on the responsibility for the department they may formerly have just worked in.

Or, they take on the new responsibility of managing people who many times are their former coworkers.

In another scenario, the hourly employee moves into a salaried role that requires decision making and autonomous actions. An individual who is used to a job in which most actions are predefined by a supervisor may struggle with the responsibility of the new role—or he or she may revel in it.

Whatever the comfort level, the employee who moves from an hourly to a salaried role will spend time adjusting to the new expectations. But, many thousands of employees have successfully made the transition.