How Does Salary Work

How does salary work? If you're getting a promotion that makes you salaried, or applying for a job that pays on a salary basis, you need to know a few things about how it works and what's expected of you.

Your salary is not based on the number of hours you work.
The biggest difference between salaried and hourly employees is that your salary is not tied to how many hours you work. Work 40 hours a week; you get your salary. Work 80 hours a week; you get your salary. While there are some exceptions for non-exempt employees, most salaried employees do not get paid overtime.

Salaried employees are generally expected to put in as many hours as it takes to get the job done, so find out what your company's expectations are before you accept a salaried position. You may find that a company expects you to work 60 hours a week, and it's up to you to decide whether the pay justifies the work schedule and lifestyle.

On the upside, salaried employees generally don't have sick or personal time, and they aren't expected to use them to take time off. Therefore, if your workload supports time off and you can arrange it with your superiors, you don't have to worry about your pay being docked to take the time off.

Exempt versus non-exempt employees.
Generally speaking, salaried employees are exempt and hourly employees are non-exempt. Exempt from what? The Fair Labor Standards Act dictates whether or not employees are entitled to overtime pay for working extra hours. Exempt employees are not entitled to overtime pay, whereas non-exempt employees are eligible for overtime pay. In most cases, becoming a salaried employee means you're exempt and do not get overtime for overtime hours worked. There are a few exceptions to this rule, though, so clarify with your company whether you'll be exempt or non-exempt.

Find out whether the salary includes bonuses.
Some salaries are simply base salaries, with bonuses awarded for exemplary performance. Salaries plus bonuses can be a way to reward you for those long hours, even though you don't get paid extra up front. However, some companies may not specify that a salary is a base plus bonuses, and you might be surprised if you're expecting the full amount on your first paycheck and find out it's bonus-dependent. Make sure you find out up front what the salary includes, and whether or not there is an opportunity for bonuses.

Benefits may be considered a part of salary.
Benefits are another way that employers entice potential employees, but sometimes these benefits are considered a part of the salary package. Most employers tell you up front what your salary is going to be, and they list benefits separately. However, some employers who can't offer a lot or are desperate to get people in the door may quote a salary that includes your benefits. As with bonuses, it's important to get a detailed view of what your salary includes and whether or not benefits are in addition to salary, or considered a part of the salary package.

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