An hourly employee is paid by the hour and receives a set wage for their time. Many hourly workers are also considered non-exempt employees entitled to overtime pay. Their overtime is calculated for each hour of their work exceeding a standard 40-hour workweek.
Who Is Considered an Hourly Employee?
Individuals paid for the number of hours they’ve worked are considered hourly employees. This is different from salaried employees, who are paid a flat wage no matter how many hours they work and receive a fixed amount in each paycheck. Businesses aren’t required to pay hourly employees for any time they haven’t worked.
Employers determine the number of hours an hourly employee will work each week, and employees are required to document their work hours in a time card system. This time card is verified and approved by the employer and then sent to payroll for processing.
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How Many Hours Can an Hourly Employee Work?
There are no federal laws requiring an hourly employee to work for a specific amount of time each week. An employee’s status under the Fair Labor Standards Act (FLSA) determines whether they’re eligible for overtime pay or not.
If hourly employees work overtime, they’re usually considered non-exempt employees required to receive extra compensation. Generally, they’re paid time-and-a-half for each hour of overtime per the FLSA.
For instance, take the hourly employee from the previous example with a wage of $15 per hour. They’ll receive one-and-a-half times their regular rate—or $22.50—for overtime work. So if they clock 43 hours during the workweek, they’ll get paid a rate of $22.50 for their additional three hours. This yields overtime pay of $67.50 and a total paycheck of $667.50.
How Does an Hourly Employee Get Paid?
Hourly employees are paid a set pay rate. In the US, workers must be paid at least the minimum wage every hour. This base rate is determined by federal or state minimum wage laws.
Some states require a higher rate than the federal minimum wage. Employers in states with no minimum wage or a wage lower than the federal standard default to the federal hourly rate.
What Is an Hourly Rate?
An hourly rate is a predetermined amount an employee earns for each hour of work. To calculate an hourly employee’s paycheck, their hourly rate is multiplied by their number of hours worked during a pay period. Many companies use digital time-tracking tools to track time, automate the payroll process, and help ensure each hourly worker is paid correctly.
For example, if an employee’s hourly rate is $15 and they worked 20 hours during a pay period, you would multiply $15 by 20 to get a total wage of $300 for their paycheck.
The amount of time an hourly employee may work each week depends on their role and schedule, as well as the type of business they’re working for. So their paychecks may vary from week to week.
Do Hourly Employees Get Benefits?
Most full-time hourly employees usually receive the same benefits as salaried employees. The Affordable Care Act (ACA) and Internal Revenue Service (IRS) define full-time employees as those who work at least 30 hours a week or 130 hours a month.
Benefit packages and policies vary across organizations, but full-time hourly employees may receive the following, and more:
- Health and dental insurance
- Life insurance
- Paid time off (PTO)
- Retirement plans
Many businesses find hiring either salaried or hourly employees beneficial, and some employ both. It all depends on the company’s structure, what works best for its workforce, and other key factors unique to the employer.
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