Pay and benefits
Salary vs. hourly pay
Salaried and hourly are payment methods. Exempt and non-exempt are legal categories. Confusing the two is what costs people overtime.
The short answer
Being paid a salary does not remove your right to overtime. Under the Fair Labor Standards Act an employee is exempt only if all three tests are met: paid on a salary basis, paid at least $684 a week ($35,568 a year, the 2019 level restored in 2026), and performing duties that fit a recognized exemption. Fail any one and overtime applies at 1.5× the regular rate for hours past 40 in a week, salary or not.
The three tests
| Test | What it requires | Where it goes wrong |
|---|---|---|
| Salary basis | A predetermined amount each week that does not vary with quality or quantity of work | Docking pay for partial days or slow weeks can destroy the exemption entirely |
| Salary level | At least $684 a week ($35,568 a year); $107,432 for the highly compensated route | State floors are often higher, and the higher one wins |
| Duties | Genuine executive, administrative, professional, computer or outside sales work | Job titles carry no weight. What the person actually does each day is what counts |
All three must be satisfied at once. The duties test is the one most often failed, and a job title such as 'manager' or 'coordinator' proves nothing on its own.
Where the threshold stands
The Department of Labor set the federal floor at $684 a week in 2019. A 2024 rule would have raised it to $844 and then $1,128 a week, but a federal court vacated it in November 2024, and in May 2026 the Department published a technical amendment formally rescinding it and restoring the 2019 levels. Several states - California, New York, Washington, Colorado and others - impose their own higher salary floors, and where a state floor is higher, that is the one that applies.
Comparing an offer honestly
| Hourly, non-exempt | Salaried, exempt | |
|---|---|---|
| Pay for hour 41 | 1.5× the regular rate | Nothing |
| Pay for a light week | Falls with the hours | Unchanged |
| Predictability | Varies with the schedule | Same every period |
| Benefits | Often tied to an hours threshold | Usually full from day one |
| Unpaid time off | Generally unpaid | A full day may be deducted; partial days generally may not |
| Effective hourly rate | Known | Salary ÷ hours actually worked, which is the number to calculate |
The single most useful calculation before accepting an exempt role is the effective rate at the hours the job really takes. Divide the salary by 52, then by your realistic weekly hours. Compare that against the hourly alternative with its overtime. The hourly paycheck calculator handles the overtime side, and the take-home pay calculator converts a salary offer into what actually reaches your account.
| Salary | At 40 hrs/week | At 45 hrs/week | At 50 hrs/week |
|---|---|---|---|
| $50,000 | $24.04/hr | $21.37/hr | $19.23/hr |
| $65,000 | $31.25/hr | $27.78/hr | $25.00/hr |
| $80,000 | $38.46/hr | $34.19/hr | $30.77/hr |
| $100,000 | $48.08/hr | $42.74/hr | $38.46/hr |
An exempt role that runs ten hours long each week is a 20% pay cut against its headline rate.
What does not change either way
Taxes are identical. Federal income tax, Social Security, Medicare and state tax are charged on wages, not on how the wages were calculated - an hourly worker and a salaried worker earning the same amount pay the same. Overtime does carry one recent difference: a federal deduction for qualified overtime premiums runs from 2025 through 2028, covered on the overtime paycheck calculator.
If you think you are misclassified
Start with the duties test rather than the title, and write down what you actually do in a typical week. Keep your own record of hours; employers must keep payroll records for at least three years, but your contemporaneous notes are what make a claim concrete. The Wage and Hour Division of the Department of Labor takes complaints directly, and many states run their own parallel process with longer look-back periods.
FAQ
Frequently asked questions
Does being paid a salary mean I do not get overtime?+
No. Salary is how you are paid; exempt is whether overtime rules apply, and they are not the same thing. To be exempt from federal overtime an employee must be paid on a salary basis of at least $684 a week ($35,568 a year), and the actual job duties must fit an executive, administrative, professional, computer or outside sales exemption. A salaried employee below that figure, or whose duties do not fit, is entitled to overtime.
What is the salary threshold for exempt employees in 2026?+
$684 a week, or $35,568 a year, under the Department of Labor's 2019 rule. A 2024 rule would have raised it in two steps, but a federal court vacated that rule in November 2024 and the Department formally rescinded it in May 2026, restoring the 2019 levels. The highly compensated employee threshold is $107,432. Several states set higher floors of their own, and the higher figure applies.
Is it better to be salaried or hourly?+
It depends on hours and predictability. Hourly pay rewards every hour worked and is protected by overtime rules, but the income moves with the schedule. Salary is steady and usually carries better benefits and progression, but hours above 40 are unpaid if the role is exempt. A 50-hour exempt job at $70,000 pays about $26.90 an hour; the same person on an hourly $30 with overtime would earn considerably more.
Can my employer switch me from hourly to salary?+
Yes, going forward, provided the pay meets any applicable minimums and the classification is correct for the duties. What an employer cannot do is call a job exempt to avoid paying overtime it legally owes. Misclassification is one of the most commonly litigated wage issues, and back pay can be owed for years.
How do I convert a salary to an hourly rate?+
Divide the annual salary by 2,080 - 40 hours a week for 52 weeks. A $65,000 salary works out to about $31.25 an hour. That figure only holds if you actually work 40 hours: at 50 hours a week the same salary is $25 an hour, which is the comparison worth making before accepting an exempt role.
Sources
- US Department of Labor, fact sheet 17A: executive, administrative and professional exemptions
- US Department of Labor, FLSA overtime pay
- US Department of Labor, 2026 technical amendment restoring the 2019 overtime salary levels
- US Department of Labor, fact sheet 21: recordkeeping under the FLSA
- IRS Publication 15 (Circular E), employer's tax guide
Employment law summary for general information, not legal advice. State rules often set higher floors than the federal ones cited here.
Read next
Related guides and tools
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- Overtime paycheck calculator
Time-and-a-half pay after taxes, plus the federal overtime deduction that started in 2025.
- Pre-tax vs. post-tax deductions
Which benefits come out before tax, which come out after, and why a 401(k) still pays Social Security.
- How many pay periods are in a year?
52, 26, 24 or 12 - and the years a biweekly payroll quietly produces a 27th paycheck.