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What is the Legal Difference Between Salary and Overtime?

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  • Written By: G. Wiesen
  • Edited By: Heather Bailey
  • Last Modified Date: 15 November 2016
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The legal difference between salary and overtime depends on the employment laws in a particular country, region, or territory. In the US, for example, salary refers to financial compensation an employee receives that does not fluctuate based on the amount of time worked each week. This is in contrast to hourly wages that are based on how much time a person works, and will be less when a person works fewer hours and greater when a person works more hours. The difference between salary and overtime is that overtime typically must be paid to someone who is paid hourly wages, while a salaried employee may be exempt from receiving overtime.

Salary and overtime are related concepts, though they are not synonymous and both pertain to the wages a person is paid. It is easiest to understand the difference between salary and overtime by first considering the meaning of “salary.” Salary refers to wages paid to an employee of a company as financial compensation based on the work that employee does for a company. These wages are paid on a regular basis, usually weekly or biweekly, and do not fluctuate based on the number of hours the employee works.

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Hourly wages are the opposite of salary wages, and constitute financial compensation paid to an employee wholly based on how many hours he or she works within a given time period. They are also typically paid out on a regular basis. Overtime payments are wages paid to hourly employees for working over a certain number of hours in a particular time period. This often refers to hours worked in a week, though excessive hours worked in a single day can also require overtime pay in some regions.

One of the major differences between salary and overtime is that in countries like the US, salary pay is grounds for exemption from receiving overtime pay. This means that someone who receives a salary, rather than hourly compensation, does not qualify for overtime pay. Employment laws in the US dictate that only hourly workers can qualify for overtime pay, primarily to prevent salaried executives from claiming overtime pay in addition to their regular salaries. This relationship between salary and overtime is also typically used to prevent managers in retail locations from receiving overtime pay.

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