Rivermate | Product owner - Andrew Simon

Global Work Glossary

What distinguishes an hourly employee?

An hourly employee is someone who is paid by their employer based on the number of hours they work per week. Unlike salaried employees who receive a fixed amount of pay regardless of their weekly hours, hourly employees' wages can vary depending on their fluctuating schedules or shifts. Their work hours and pay rate are determined by the employer, often tracked using a time card system or timesheet.

Hourly employees can work either part-time or full-time. Their pay is determined by a pre-established hourly wage set by the employer. They may also earn overtime and bonus pay for any hours worked beyond the usual 40-hour workweek, depending on labor laws and company policies. In most countries and states, labor laws require hourly workers to receive at least the minimum wage.

Payment frequency for hourly employees can vary and may include weekly, biweekly, semimonthly, or monthly schedules, similar to salaried workers. Regarding overtime pay, most countries have laws requiring employers to compensate hourly employees for overtime hours. In the US, for instance, hourly workers are considered non-exempt under the Fair Labor Standards Act (FLSA) and are entitled to time-and-a-half pay for hours worked over 40 in a week.

As for benefits, many companies nowadays provide both hourly and salaried employees access to similar benefit packages, including health insurance, life insurance, paid time off (PTO), retirement plans, and more. Hourly workers who achieve full-time status may be entitled to the same benefits as salaried employees.

The main difference between hourly and salaried positions lies in flexibility and benefits. Hourly roles offer more flexibility in work hours and scheduling but may come with fewer benefits and stability compared to salaried positions. Employers need to understand these differences to ensure proper compensation and workload distribution across their teams.

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