Moneyzine
Contents
/Careers Guides/Hourly Employee

Hourly Employee

Moneyzine Editor
Author: 
Moneyzine Editor
2 mins
September 26th, 2023
Advertiser Disclosure

Definition

The term hourly employee refers to workers that employers compensate using a combination of actual time worked and a predefined rate of pay. The total compensation an hourly employee makes in a single workweek will depend on the total number of hours worked.

Explanation

Also known as an hourly worker, hourly employees are paid for the actual time they work. Unlike a salaried employee, that is paid a fixed dollar amount each week, an hourly employee's weekly salary is a function of the total number of hours they work in a week.

Workers that are paid on an hourly basis normally hold entry-level jobs or are blue collar workers performing manual labor. For example, hourly workers are commonly found in the manufacturing sector of the economy.

Note: Ever wondered how much an hourly employee makes a year and vice versa? Here's the yearly salary for $15/hour wage and hourly rate for a $60,000/year salary.

The mechanism for compensating an employee (hourly or salaried) is one of several tests that determine if the employee is exempt or non-exempt under the Fair Labor Standards Act (FLSA). Salaried employees making in excess of $455 per week are always exempt, while hourly employees can be non-exempt if their responsibilities and pay scale pass the remaining FLSA tests.

The benefits package an hourly worker receives will be dictated by company policy. For example, holiday pay, floating holidays, and paid sick time are frequently negotiated as part of a collective bargaining agreement. Finally, if the hourly employee is also a non-exempt employee under the FLSA, they are entitled to overtime pay at not less than 1.5 times their hourly rate of pay when they work in excess of 40 hours in a single workweek.

Related Terms

Related Content

Is It Worth Pursuing a Master's Degree?
In an era where education is synonymous with opportunity, many consider pursuing a Master's degree a surefire way to advance their careers. However, is it really the golden ticket to success we've been led to believe?
March 21st, 2024
The gender pay gap, the persistent disparity in average earnings between men and women throughout their careers, serves as a critical measure of wage inequality. This gap underscores the ongoing issue of income disparity, despite the ideal of equal pay for equal work.
March 14th, 2024
7 Essential Financial Moves After Losing Your Job
Navigating the stormy seas of job loss? You're not alone.
February 23rd, 2024
The Most In-Demand Skills to Get Hired in 2024
Every job requires a combination of vital skills, but what skillset is valued most in 2024? As the job market evolves, staying ahead means it’s key to understand and acquire the skills that employers value most.
February 20th, 2024
Key Productivity in the Workplace Statistics for 2024
In 2023, global employee engagement saw a slight uptick, with 23% of employees engaged, up by two percentage points. However, a sizable 59% are categorized as disengaged, while actively disengaged employees, known as "loud quitting," declined to 18%. These figures highlight the persistent challenge for organizations to cultivate happiness and productivity in the workplace.
January 31st, 2024

Contributors

Moneyzine 2024. All Rights Reserved.