Money Talks Monday

How well do you understand your pay?

More importantly, do you understand your pay structure?

Almost all employees know if they are hourly or salaried employees, but many who are salaried do not know the difference between salaried exempt and salaried non-exempt. There is a significant difference between the two. If you do not know, you should seek clarification from your employer. Salaried exempt classifies an employee, typically in mid-level to upper management, to work a certain number of hours per week for at the definite salary stated without overtime pay. Most salaried exempt positions are incentivized; meaning the employee has a bonus or commission structure. Salaried non-exempt is a completely different type of employee. A non-exempt salaried employee must receive overtime pay, regardless of whether or not his or her position is incentivized. Non-exempt salaries are often paid to non-managers, laborers, general operating associates, etc. or even new hires with the potential for rapid advancement.

When considering a job offer or looking at your own current position, make sure you know your salaried classification. You could be missing out on incentive pay or overtime pay by not knowing your classification. Now, does this mean your employer is cheating you? Not normally. The Department of Labor determines the classification of a position based on the job description. Often smaller employers and even major corporations are unaware of this without being audited. Many employers, just like many workers, think a salary is a salary and do not consider exemption status. Are you required, if non-exempt, to be paid time and half for every hour worked? No. There must be hourly compensation, though, for time worked over your salaried hours. The standard is typically half time per hour. In a general example, if you earn a non-exempt salary of $30,000 annually then your rough rate of pay is $15.00/hour. If your salary is based on a 40-hour work week, you would normally be paid $7.50/hour for each hour you work over 40 hours. Understanding your pay structure, status, and any incentive pay is very important to maximize your earnings. Make sure you read your position description and employee handbook so you know where you stand and so you stand in the best place for your financial health!