What is the key difference between hourly wages and salaried wages?

The key difference between hourly wages and salaried wages lies in how they are calculated and paid. Hourly wages are determined based on the number of hours an employee works within a pay period. Therefore, an employee earning hourly wages will be compensated for each hour they work and may receive overtime pay for hours worked beyond a standard workweek.

On the other hand, salaried wages represent a fixed amount that an employee is paid regardless of the number of hours worked. This means that salaried employees receive a consistent paycheck, which does not fluctuate based on hours worked, making it easier for budgeting and financial planning.

This distinction is crucial in understanding payroll and labor laws, as it affects calculations for overtime, benefits eligibility, and tax implications. The consistency of salaried wages can provide financial stability, but it also often comes with expectations for job responsibilities that may extend beyond standard working hours without additional compensation.