Hourly vs Salaried Payroll: Overtime Rules, FLSA Classification & Compliance

1. The Fundamental Difference: Exempt vs Non-Exempt

Under labor regulations like the Fair Labor Standards Act (FLSA), employees are classified into two broad categories: Non-Exempt (typically hourly workers entitled to overtime pay) and Exempt (typically salaried executive/professional staff exempt from overtime).

A common mistake for growing startups is treating hourly staff like salaried workers, resulting in unpaid overtime liabilities and potential Department of Labor investigations.

• Hourly Non-Exempt: Compensation is directly tied to verified timesheet hours. Any hours worked beyond 40 per week (or 8 per day in certain regions) must be paid at 1.5x time-and-a-half rate.
• Salaried Exempt: Guaranteed fixed salary per pay period regardless of hours worked, provided the role meets statutory duties tests and minimum salary thresholds.

2. Managing Hybrid Workforces in Wokaim

Wokaim enables companies to seamlessly configure custom pay rates, overtime multipliers, and attendance expectations per individual employee under a single dashboard.

Hourly employees clock in and out with 1-click timesheets, while salaried workers receive automated baseline pay with deductions for unpaid leaves.