A wage is pay by the hour (or by the piece); a salary is a fixed amount per pay period. The difference shows up in overtime, in short weeks and in what you have to track.
| Hourly wage | Salary | |
|---|---|---|
| How pay is set | Rate times hours worked | Fixed amount per period |
| Overtime | Owed for hours over 40 in a workweek (plus state daily rules) | Owed only if non-exempt; exempt roles need $684 a week minimum and qualifying duties |
| Short week | Paid for hours actually worked | Exempt: full salary if any work done, with limited exceptions |
| Time records | Required: hours each day and week | Required for non-exempt; good practice for exempt |
| Typical roles | Frontline, shift and part-time work | Managers, professionals, some supervisors |
Option A: an hourly wage of $25. In a 40-hour week she earns $1,000. In a 48-hour week she earns 40 times $25 plus 8 times $37.50, or $1,300.
EZTime labor rule alerts flag overtime and missed rest periods before payroll.
Option B: a salary of $1,000 a week ($52,000 a year), and she qualifies as exempt. A 48-hour week still pays $1,000. Over a year with 10 weeks of 48 hours, Option A pays $3,000 more.
Option C: a salary of $1,000 a week, but her duties do not meet an exemption, so she is salaried non-exempt. Her salary covers 40 hours, and the 8 extra hours are owed at time and a half of her regular rate. That is the arrangement employers sometimes fall into by accident when a “manager” spends most of the shift on the line.
For most frontline roles, hourly wages are simpler and safer: pay matches hours, and overtime rules are clear. Salary makes sense for roles whose work is measured by outcomes, that meet an exemption’s duties test, and where the salary is comfortably above the threshold, including any higher state threshold.
Whichever you choose, record hours for anyone who is non-exempt. The salary does not remove the need to track time.
Start from the work, not the title. If hours vary a lot week to week and the role is mostly hands-on, an hourly wage is usually the fairest and simplest choice. If the role is mostly managing or professional work, the salary meets the required level, and hours are fairly steady, a salary may fit.
Explain the choice to the employee in their offer: how pay is calculated, whether overtime applies, what happens in a short week, and how hours are recorded. Misunderstandings about these four points are behind many pay complaints after a promotion.
A cook is offered a kitchen supervisor role either at $24 an hour or at a salary of $1,000 a week. Her schedule averages 45 hours.
Hourly, she would earn 40 times $24 plus 5 times $36, or $1,140 a week. On the salary, if exempt, she earns $1,000. The difference is $140 a week, about $7,280 a year. She chooses hourly, and the restaurant keeps her non-exempt until the role becomes mostly supervision.
No. In everyday speech they are used loosely, but in payroll a wage is usually hourly pay, and a salary is a fixed amount per period.
It depends on hours. An hourly role with regular overtime can pay more than a salary that looks higher on paper. Compare annual totals, including typical overtime.
Yes, if they are non-exempt. Being on salary alone does not make someone exempt.
Divide the annual salary by the hours paid in a year, often 2,080 for a 40-hour week. The salary to hourly calculator does it for you.
Exempt employees generally receive their full salary for any week they work. Holiday pay for hourly staff depends on the employer’s policy.
Yes. The pay type should match the role’s duties and the exemption tests, applied consistently to people in the same role.
EZTime turns clock-ins and approved corrections into signed monthly reports you can export to PDF or Excel for payroll.