Is salaried income based on hours at all?

Question

I just got my first salaried position, working as an iOS Developer in California. Previously, I had only ever been a contract worker getting paid by the hour, so I'm trying to wrap my head around what's changed.

As I understand it, salaries are based on annual amounts, rather than hourly rates multiplied by hours worked. My research has indicated that above a certain level (which I seem to be above), I am not longer entitled to overtime, for example.

But my question, which seems simple but for which I haven't been able to find a clear answer, is this: is a salaried paycheck affected at all by varying hours worked?

In other words, if I get $X for working 40 hours, would I get the exact same $X for working 41 hours? Or would that 41st hour simply be paid at the normal rate (a weekly total of X + X/40), rather than an overtime rate (i.e. X + X/40*1.25)?

Answer 1

As I understand it, salaries are based on annual amounts, rather than hourly rates multiplied by hours worked.

"Exempt" (salaried) are usually not entitled to overtime. But also (usually) get additional benefits that are not provided to contract workers. So your compensation is not solely your salary.

But my question, which seems simple but for which I haven't been able to find a clear answer, is this: is a salaried paycheck affected at all by varying hours worked?

Usually not. Though if you put in ungodly hours to meat a dedline or delivery date your company may reward you with a bonus (though its not obliged to, not doing so will lead you not put in the time and thus the company to miss deadlines in the future).

In other words, if I get $X for working 40 hours, would I get the exact same $X for working 41 hours? Or would that 41st hour simply be paid at the normal rate (a weekly total of X + X/40), rather than an overtime rate (i.e. X + X/40*1.25)?

You are not considered to be working at an hourly rate. You are working at a yearly rate and are expected to work the hours required to get the job done. On average you should expect to work 2000 hours a year (some weeks you work more some less than 40 hours) depends on the load. Recently I have been putting in a lot of hours. So I plan to take every Friday off for the next two months (my boss is OK with that as I got the sutff done).

But also remember that you get a vacation. So you are still getting paid when you are on vacation and you still get the 40 hours credit towards your 2000 hours a year.

Answer 2

Your understanding of how salaries work is correct. Aside from overtime (which I cover below), salaries are generally based on what your employer thinks your work is worth, and whatever they're willing to pay to keep it competitive with other employers. It's common to require full time salaried employees to work 40 hours per week, but that's not an inherent requirement of a salaried position. As for overtime:

You are (probably) entitled to overtime pay under California law.

Q. Are salaried employees entitled to overtime?

A. It depends. A salaried employee must be paid overtime unless they meet the test for exempt status as defined by federal and state laws, or unless they are specifically exempted from overtime by the provisions of one of the Industrial Welfare Commission Wage Orders regulating wages, hours and working conditions.

There are several links in that paragraph on the original site, but they don't go anywhere that explains what conditions lead to exempt status. I'll edit in that information if I find it.

Assuming that you're not exempted, the overtime requirement is as follows:

In California, the general overtime provisions are that a nonexempt employee…shall not be employed more than eight hours in any workday or more than 40 hours in any workweek unless he or she receives one and one-half times his or her regular rate of pay for all hours worked over eight hours in any workday and over 40 hours in the workweek.

It goes on to explain the process for calculating the "regular rate of pay" for salaried employees:

If you are paid a salary, the regular rate is determined as follows:

1. Multiply the monthly remuneration by 12 (months) to get the annual salary.

2. Divide the annual salary by 52 (weeks) to get the weekly salary.

3. Divide the weekly salary by the number of legal maximum regular hours (40) to get the regular hourly rate.

Answer 3

Salaried employees are paid based on the assumption that they will be judged at the end of the year on total productivity, not on precisely how many hours were spent in the office to achieve that productivity. Of course participating at meetings and in brainstorming sessions is also part of productivity, as is being available for others to consult with, so if you plan on spending fewer hours than typical in the office, or working flex-time, or working odd hours you need to get permission from your manager.

And of course if you're doing something where your hous get billed directly to customers, tracking hours accurately is important.

tl;dr: For a salaried employee hours do not directly affect pay, but they may indirectly affect bonuses (in one direction) or job retention (in the other direction) or promotions/raises (in either direction)