What is a Salary?

business economy

For many people, the use of the term salary has to do with the reception of any type of regular payments from an employer to an employee. While this is close to the mark, it is not quite true. Technically, a salary is an agreed upon amount of pay that is to be extended at regular intervals, in exchange for the competent performance of specific tasks within the workplace. Here are some of the distinguishing characteristics of the salary that set it apart from other forms of remuneration.

In many countries, salaries are based not on the number of hours worked, but on general job performance. Thus, a salaried employee may be expected to put in a minimum number of hours, but also be available if extra work is needed. In cases where the job salary remains the same no matter what hours are worked, the employer does not provide overtime pay, although some employers do reward employees on salary with a bonus at some point during the year. However, the point is that most employees who have agreed to receiving pay for their services by way of a salary are not generally subject to overtime laws regarding employment conditions.

While many people refer to any type of pay as a salary, the fact is that the proper term to use when the pay is based on a per-hour rate is a wage. Unlike the salary, an employee that is paid a wage typically can expect to receive extra pay when working more than the standard number of hours per week. Wages can include regular pay for hours worked, along with time and a half pay for any other hours worked above the usual and standard workweek. Some companies will pay double the normal rate in wages when asking the employee to work on holidays and in other situations.

Being on salary usually also includes some perks that may or may not be applicable to wage related work. For instance, salaried positions usually accrue sick days and vacation days that may be used when needed. Not all hourly positions provide those types of benefits. Second, being on a salary means that you always know what amount of money is coming into the household. With a wage, the amount may vary from one pay period to another.

While the salary approach to employee compensation is often the most sought after form of payment, the fact is that there are many wage related positions that pay as well or even better than some salaried positions. Depending on the career and personal goals of the individual, one model may emerge as being both more desirable and practical for a given situation.

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12
I have worked for the same company going on six years. i started out as an hourly wage, with time and a half for OT, and a written policy of sick, personal and vacation days based on length of service. After four years, with rate increases, the manager was fired and I was offered a salary with written terms for vacation and sick time. As it seemed in my best interest at the time, I took the offer. This offer was extended by the owner. A new person took over policies and procedures and revised sick, vacation and personal into PTO time, which she fails to keep track of through our payroll system. Anyway, after 16 months of 50-plus hours a week, numerous phone calls after hours from the owner, and interference with the most important part of my position to create reports that were not even reviewed, I went to my boss and stated I no longer wanted to run the entire department, that what I do best is something else and since I had no real authority to hire or fire (another person did that without my input) I felt like I was not allowed to run the department as I felt was most productive. After negotiation, I took an offer of piece work, plus a base pay that was substantially less than what I had been paid, but the piece work evened out the final number. The one hedge was the cacation and sick time I had been contracted to be entitled to due to the years I had with the company. We compromised on the new "PTO" policy, but at the hourly rate I had been paid before. I lost in that one, but its a tough job market, and I need a job. Well today, I was told that the are revising and cutting back on PTO, and that it was not in writing yet, but it would mean less than the policy currently was. Also, medical benefits, that were promised to be covered by the employer in full, are going to change once again, with the employee contributing more. To me, this seems like I have taken a pay cut after pay cut. I was told if anyone didn't like the new policy when it comes out, then there's the door. I was once told in the state of Florida, "benefits" are a contract between employee and employer, and the Department of Labor does not get involved in things like that - is that correct? I do not wish to quit, even though the second in command would love for me to do just that, as the hostility radiates off of her when we need to interact, but is there any other recourse that can be done?
- anon47938
11
i work for a dentist's office. I am the office manager and i am on salary. Recently my boss decided to close every Friday and reduced my salary, while everyone is still getting paid hourly for each day they work. I am only getting paid less the Friday. Is this correct?
- anon45449
10
all of you should call you state labor relations department.
- anon43035
9
I am a manager of a large department and being asked to fire an employee who has come back from disability for 2 months *and* the owner has passed down through the other owner who told me to write her up to fire her..."she is a liability". I feel extremely wrong and need assistance.
- anon40210
8
If i was given a retention bonus to stay until my job ended. Does that bonus count as a severance or a separation bonus?
- anon39099
7
I get paid by salary. On a typical pay period I work 80 hours, but when the month is long I may work up to 96 hours. Why do I still get the same pay when I work 96 hours as I do 80. If I miss a day when I do have the long pay periods I get paid less. Is that legal?
- anon28138
6
Mike, check with your state's Wage and Hour Board or department of Industrial Relations (whichever is present in your state government structure). They can tell you exactly what is and is not allowed, based on whether you are classified as a full time employee or as an independent contractor.
- anon18285
5
I live in West Virginia. When I got the job I have now I agreed to be paid once a month. I get paid on the 1st of every month. I agreed to be paid $10.50 per hour at 173.3 hours a month. However I went to a trade show and had to put in 42 hours overtime. I never got paid for it. Is that legal?
- mikevwvu
4
I was told that because I am salary I have to put in no less than 40 hours a week and if I do not it will be taken from my sick/personal time. However, I could work 50 hours a week for weeks on end with no comp time. This also includes business trips, which can take me away from home for up to 4 days at a time, and it is still considered 40hrs only. I do not have a problem doing my share of work, however this just does not seem right to me. Is this lawful?
- anon17158
3
You don't mention if you are working in a unionized situation or where you live. Both of these factors can impact the answers to your question. A good place to begin is by looking at the laws that govern the setting of salary and wages in your area. For example, how many hours per week does your jurisdiction require in order to be considered full time? Does this law impact both salaried and hourly personnel? Knowing the laws that your employer has to follow will help a great deal.
- mdt
2
I would love the answer to this question also. As it is happening to me right now. I'm new here and not sure how this works. I don't see any answers posted on here have there been any yet?
- abyrdhunter
1
I was approached by a question by one of my employees; How can you decrease my pay if i work under 40-hours and i am a salary paid employee? What's the point of having sick and personal days if all of the hourly and salary employees are paid the same after 90-days? We don't have a complete salary policy, so if i could get some advice, I would greatly appreciate it. Thanks. Michelle
- anon5334

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Written by Malcolm Tatum
Last Modified: 08 October 2009

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