Federal law mandates that certain types of workers must be paid overtime. An employer can waive overtime pay for an exempt employee. Non-exempt employees are always eligible for overtime. Salaried employees earn the same amount of pay every week, regardless of the number of hours worked. Hourly wage earners are paid for the number of hours worked. Generally, the salaried employee is exempt from overtime; non-exempt employees are paid an hourly wage. But one type of worker crosses these categorical boundaries: the non-exempt, salaried employee.
Exempt vs. Non-exempt
Though exempt employees are typically paid a salary, salaried employees aren't exempt from overtime because of this. It is the nature of the work they do that makes them exempt. They are usually generally have a high degree of discretion in the manner and means of work. They tend to be, but aren't always, supervisors or holders of other managerial and professional positions. They leave when the job is done. Hourly employees meanwhile, may perform well-defined tasks. When they work more than 40 hours per week, hourly employees earn 1.5 times their hourly rate for each hour worked.
Disadvantages to an Employer
Non-exempt, salaried employees can be somewhat rare. The big disadvantage to an employer is that a non-exempt, salaried employee who works 20 hours per week is paid the same as if she works 40 hours. Docking pay for working less than 40 hours per week tends to imply that these employees are truly hourly employees, and could cause an employer to face wage-and-hour violations if the employee works more than 40 hours per week.
Disadvantages to an Employee
The big disadvantage to an employee is determining how much money you truly make in a week. A salaried employee who makes $400 per week for a 40-hour week can be described as earning $10 per hour. In most cases, this employee is eligible for overtime at a rate of $15 per hour. Some compensation plans, however, allow employees to work flexible hours so they work 35 hours one week, and 45 the next. The employee will still be eligible for overtime pay the second week, but may see some of that amount "set off" by the five hours he didn't work in the first week.
Federal law is silent on the number of hours a person must work in a week, and employers and employees can agree to a legal arrangement in which an employee works more than 40 hours per week for a predetermined salary. This is especially important for low-wage workers who make close to the minimum wage. For example, if an employer and employee agree that an employee will work 50 hours per week for $500, it isn't necessarily the case that this employee makes $10 an hour. For hours 41 to 50 in a week, the employee must be paid time and a half, meaning that for hours 1 through 40 of the week, the employee is actually making $8 per hour. For employees who earn close to the minimum wage, such plans may violate wage and hour laws.