January 28, 2025

A Guide to Salaried Employees: Definition and Benefits

In a business world full of uncertainties, salaried employees provide something invaluable: stability. These workers form the backbone of many successful companies, offering predictable costs for employers and steady income for employees.

A salaried employee earns a fixed amount each pay period, regardless of hours worked — unlike workers who get paid for every hour on the clock.

Here’s a guide to how salary pay works for employers, including the benefits and challenges of hiring salaried workers.

What is a salaried employee?

A salaried employee gets paid a fixed amount each pay period instead of earning money by the hour. Whether they work 35 or 45 hours in a workweek, their pay is the same. Most employers distribute this pay at fixed periods like two weeks or once a month, creating a predictable income stream for both the business and the employee.

These positions typically demand more responsibility than hourly roles. Most salaried employees put in between 40 and 50 hours per workweek, though some might work longer when projects demand it. Unlike hourly employees who earn overtime pay for extra hours, salaried employees generally don't receive extra compensation for working beyond 40 hours, according to the Fair Labor Standards Act (FLSA).

Along with steady paychecks, salaried employees often receive better benefits than hourly workers, including health insurance, retirement plans, and paid vacation time. They also might enjoy more flexibility without strict clock-in requirements.

Salaried versus hourly employees: 3 key differences

Let's take a deeper dive into the differences between salaried and hourly employees to give you a clearer picture of each type of worker.

Here's what sets these two apart:

Pay structure. Hourly workers earn money for each hour they work, plus overtime pay when they put in more than 40 hours in a workweek. Salaried workers, on the other hand, are exempt from overtime, so they receive the same paycheck regardless of their hours.
Job roles and titles. Salaried positions typically come with more professional titles and higher-level responsibilities. These roles often involve applying advanced technical skills, making key decisions, and handling long-term planning rather than focusing on day-to-day tasks.
Time tracking requirements. Hourly workers need to carefully log their hours each day and may have to clock in and out for shifts. Salaried employees usually don't track their time since their pay stays consistent, regardless of hours worked.

5 benefits of hiring salaried employees

Whether you're creating new positions or rethinking existing ones, offering salaried roles can strengthen your company in a few different ways:

Workforce stability and loyalty. Salaried employees tend to stick around longer because they value their steady paychecks and comprehensive benefits packages. This reliability helps build stronger teams and deeper workplace relationships.
Reduced turnover. When employees know exactly what their salary is, how much they'll earn each month, and how to advance, they're more likely to be satisfied with their roles and stay with your company. This saves you money on hiring and training while keeping your most valuable employees in-house.
Professional growth potential. Positions with salaries often attract ambitious employees looking to build their careers. These workers typically bring more professional experience and leadership potential to your company.
Improved productivity. Salaried workers focus on getting the job done rather than watching the clock. Without hourly limits, they can tackle projects more flexibly and take more ownership of their work.
Easier budgeting. Fixed salaries make it simpler to predict labor costs and plan your company's finances. You won't have to worry about fluctuating overtime pay or varying hourly schedules throwing off your budget.

5 challenges of hiring salaried employees

While salaried positions bring many benefits, they also come with their own set of challenges. Here's what to watch out for:

1. Work-life balance struggles

Since salaried employees are exempt from overtime pay, they may find themselves putting in long hours to finish projects. Working long hours for extended periods can lead to burnout. Plus, since salaried employees are exempt from overtime pay, they don’t get paid extra for this additional time.

2. Schedule unpredictability

Unlike hourly workers who clock out at a set time, salaried workers might need to stay late for urgent projects or handle tasks outside normal business hours. This can make it harder to plan for their personal lives.

3. Fixed cost commitments

You need to pay full salaries, even during slower periods when there's less work. Since salaried workers are exempt from overtime, you can't reduce their pay for working fewer hours without risking their exempt employee status.

4. Higher expectations

Salaried positions often come with increased responsibilities and pressure to perform. Workers are usually expected to handle whatever comes up, even if it means longer hours or tackling tasks outside their usual duties.

5. Benefit management complexity

With salaried employees, full benefits packages are the standard. This means you need to handle more complex HR administration, from vacation time tracking to retirement contributions.

Fortunately, there are simple ways to enhance your benefits offering, like EarnIn's financial wellness tools. EarnIn helps employees thrive financially, fostering peace of mind and empowering them to feel confident, productive, and financially healthy. Best of all, EarnIn requires no integration and comes at no cost to employers.

Legal considerations for employers of salaried employees

Employing salaried workers comes with specific legal requirements you need to follow. Let's look at the key rules:

Overtime and exempt employee status. Salaried employees are exempt from overtime pay, but this exemption isn't automatic. The FLSA lays out which job duties qualify for exempt employee status — typically professional, executive, or administrative work. To meet labor laws for salaried employees, workers must earn at least $684 per workweek. The U.S. Department of Labor oversees these rules, along with more than 180 other federal workplace laws.
Pay deductions. You can't reduce a salaried worker's pay except under certain conditions. Situations you can deduct from salaried workers' paychecks include time off for personal reasons (like family needs or vacation), sick days once paid leave is used up, safety violations, and the breaching of company policies.
Time tracking flexibility. Unlike hourly workers, salaried employees don't have to clock in and out each day. However, you still need to keep good records of the days they work to manage their leave time properly.

When to consider salaried employees for your workforce

Making the choice between salaried and hourly positions can significantly impact your business. Here are some of the main factors for deciding if salaried roles make sense for different positions:

The right kind of work. Look for positions that need consistent coverage and don't follow rigid clock-in, clock-out schedules. These might include jobs where tracking exact hours doesn't make sense, like management roles or positions that involve work across multiple locations. These roles require a higher level of trust and accountability.
Growth potential and commitment. Consider salaried roles for jobs that need a strong commitment. These positions often have clear paths for advancement and help employees become more marketable in their industry. They come with higher professional status and work best for employees who care more about job satisfaction than earning overtime pay.
Financial considerations. While salaried positions might cost more upfront, they can make financial sense when you need predictable labor costs. They're especially valuable for roles with fluctuating workloads, where overtime costs for hourly workers might get expensive. Consider this option when reducing turnover is a priority.

Before making your decision, evaluate whether the workload truly justifies a full-time salary and confirm that the role meets FLSA exemption requirements. Think about if the position aligns with your company's long-term goals and needs the level of autonomy typically given to salaried staff.

Empower your salaried team with financial wellness benefits

Whether you’re hiring salaried or hourly employees, supporting your workforce means going beyond offering consistent pay. With EarnIn’s EWA¹ — along with tools like Early Pay,² Credit Monitoring,³ and BalanceShield⁴— you can help employees manage financial challenges more easily. EarnIn provides employees the flexibility to access their pay when they need it, promoting peace of mind and better financial well-being. Offering EarnIn as a financial wellness benefit at no cost to your business shows your commitment to their financial security and boosts engagement by alleviating everyday financial stress.

EarnIn's benefits make sense for everyone on your team, whether they make a hefty salary or work part-time. Discover how EarnIn can support your company today.

CTA: Learn more about EarnIn to boost employee financial wellness

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

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A pay period is the time between your paychecks, such as weekly, biweekly, or monthly. EarnIn determines your daily and pay period limits (“Daily Max” and “Pay Period Max”) based on your income and financial risk factors as outlined in the Cash Out Maxes section of our Cash Out User Agreement. EarnIn reserves the right to adjust the Daily Max and Pay Period Max at its discretion. Your actual Daily Max will be displayed in your EarnIn account before each Cash Out.

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Early Pay is an optional feature that requires you to open a Deposit Account with Evolve Bank & Trust, Member FDIC and update your direct deposit routing with your employer. The FDIC provides deposit insurance to protect your money in the event of a bank failure. More details about deposit insurance here. This Deposit Account will receive your paycheck and will redirect it to the bank account you link to your EarnIn account. EarnIn will set aside the necessary funds from your paycheck to cover any tips, Lightning Speed fees, and Cash-Out balances from the previous pay period. Any remaining funds will be sent to your linked bank account. If you opt for Lightning Speed transfers, Evolve Bank & Trust will charge you a $2.99 fee to transfer your paycheck to your linked bank account on the same day your employer processes payroll, which may be up to 2 days before your scheduled payday. If you do not opt for Lightning Speed transfers, Evolve Bank & Trust will automatically transfer your paycheck to your linked bank account for free, by your regular payday. Early Pay is available to eligible EarnIn members in select states, and additional restrictions may apply. For more information, please refer to our FAQ.

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