What is the difference between salary and hourly pay?

Salary is a fixed amount paid regardless of hours worked, typically expressed as an annual figure divided into pay periods. Hourly pay compensates based on actual hours worked, varying each pay period. The distinction matters for overtime eligibility, budgeting, and employee expectations. Salary does not automatically mean exempt from overtime. Classification depends on duties and compensation level.

Choosing the right structure

Salary works well for roles with predictable workloads, significant autonomy, and responsibilities that do not fit neat hourly boundaries. Hourly suits variable schedules, part-time positions, and roles where tracking time serves operational purposes. Many professional service firms use salary for professionals and hourly for administrative staff, though exceptions exist in both directions.

Converting between salary and hourly

To find the hourly equivalent of salary, divide annual salary by 2,080 hours (40 hours times 52 weeks). A $75,000 salary equals roughly $36 per hour. To find the salary equivalent of hourly, multiply the hourly rate by 2,080. These conversions assume full-time work without overtime. Actual costs include benefits, taxes, and potential overtime premiums for hourly workers.