Overview
Salary is the name given to the form of
regular or periodic payment that an employee earns in exchange for a set
amount of time on a specified job. The term salary is generally used to
distinguish between an hourly wage earner and a person with a more
fixed position, such as managerial.
Salary is the financial compensation a company gives you for working
for them. It is generally based on your potential or supposed value to
the company. Education, skill level, experience, and job performance are
some of the factors considered when a company decides how much salary
to offer. Other considerations, such as the corporate bottom line and
profit margin also go into the decision of how much pay should be
offered.Another term for salary is "fixed pay." More often, employees and employers are viewing salary as part of a package. The package includes pay, bonuses, incentive pay, and any applicable commissions or conveyance.
The Fair Labor Standards Act of 1938 was revised in August 2004. This governs pay structure and who is applicable for a salary position. There are six positions that are currently eligible for salary pay instead of an hourly wage:
- Executives - defined as anyone who directs or employs others.
- Administrative employees (such as administrative assistants, administration managers etc.) - defined as anyone who exercises discretion as part of their work.
- Professionals (doctors, dentists, lawyers, clergy, accountants etc.) - defined as anyone who is expected to service the needs of others.
- Creative Professional Employees in an artistic field - defined as artists, performers etc.
- Outside Sales Employees - defined as those employees who must work outside of an employer's office or other place of business.
- Computer Employees - those who comply by other threshold tests and requirements.
How it Works
Salary is often paid on a bi-weekly or on a monthly schedule. The company keeps records of the time worked by the employee, but it is also a good idea for the employee to keep their own records as well. Laws that govern the required minimum salary pay for a particular profession vary. Every company's human resources department has all the salary information pertaining to any profession involved in the company.Generally, those professionals who are on salary are not paid overtime as a minimum wage earner might be paid. Also, more work time is commonly required for salary earners. However, the salary earned is generally much higher as are benefits, perks, and other extras that go with the position.
Benefits
The benefit of being on a salaried profession is a higher wage and a set income. Based on your job performance, you can be sure of a prospective career growth.Costs
Costs depend on the salary given to an employee. These can include the withholding of taxes or payment of professional fees. For a company, costs can include payroll, bookkeeping, and matched contributions. An estimate is indeterminate because it varies with each company.Timing
Employees will be on a salary plan anytime he or she goes into company management or becomes a professional through advanced education.Professionals and managers usually work on a salary plan, while production employees or first-level employees are paid on an hourly basis. When deciding what is right for you, look at the pay being offered in light of the hours you will be working. Divide the pay by the number of hours you are expected to work each week to get your hourly rate. When looking at different jobs, this can be an important comparison tool.