The US Government Fair labor standards act defines in part who shall be hourly employees and who shall be hourly. More information on specific cases can be found on the Fair Labor Standards website.

The first and perhaps the most valid test is "Do you supervise other personnel". If you do you still could still be required to be paid hourly under the law. There are many documented cases where salaried personnel have filed claims against past employers for unfair labor practices involving long work hours and low pay.

Form the perspective of an employer the benefits of having hourly employees where time spent can be monitored and production measured are enormous. Similar benefits to salaried employees, can be setup for hourly employees, with the aid of a computer software programs similar to TimeLegal.

The computer support and programming industry has been singled out as an example of salaried employee abuse. In several court complaints filed in California recently, past and present employees are seeking compensation for long hours work. From an employee's perspective there are good and bad points to being salary, following are some case examples.

Since 1996, I've been almost exclusively in salaried positions. The benefits of salary are readily apparent: paid vacations, paid holidays, sick leave, and no "slave to the clock" mentality. There seems to often be a great professionalism amongst salaried employees, a dedication to goal-oriented work, rather than time-oriented "putting the hours in". And yet... there's a difference in a bad way, too. There's a feeling in much of the tech industry that a company "owns" you when you're on salary, that your time is not your own. Many tech companies abuse this, by working employees sixty-hour weeks for months on end, often without any explicit requirement to put those hours in, but with a whole lot of peer pressure.

Yet here I am, now, paid by the hour. Many hourly employees get the same benefits salaried workers do, including the paid holidays, sick leave, vacations, etc. They simply earn it in a different way, and their paychecks vary according to how many hours they've put in. The perspective is very, very different. Maybe it's because I'm a contractor, too, rather than an employee, that I feel simply very task-oriented. I get in in the morning with certain objectives, and attempt to accomplish those objectives in a timely manner. I prepare regular reports on my progress so that the money invested by my customer is shown to be well-spent. And I generally go home at 5:00 without any compunctions at in the vein of wanting to stay longer "to get the project out the door". It would seem to be wasteful of the customer's money to put in sixty-hour weeks when there is no need.

Where do you sit on the "hourly versus salary" question? Which do you, or would you, prefer to get in your profession? Why?

As for me, right now, I'm enjoying the heck out of getting paid by the hour. I dislike the lack of benefits, but I like seeing the $$$ on the paychecks, as they represent "real" effort to me, rather than my stipend for just being a part of the company. Heck, I also feel like my evenings are my own, and I can pick up another gig or two from time to time. I guess I feel a whole lot less "owned" than I ever did as a salaried employee, and I keep thinking that, one of these days soon, I need to really get more into making money in my own business. Of course, other than my technical knowledge and my modest musical talents, it's difficult to say what I'd make that money in :).

Sammy, to me, is a great example to me of a guy making it work. He's pursuing a dream with his own business. When you're just hanging out there, relying solely on your own abilities to bring in the dough, rather than a corporate wage... That just really seems like living closer to the metal. Gotta be a lot of Ramen in there somewhere though.

Is it fair to treat salaried and hourly employees differently in reviews, and Is it legal to give hourly employees reviews more frequently than salaried personnel?

I work for a nationwide industrial company that seems to have no set timeframes for performance reviews and pay increases for salaried employees. Yet the company has very strict wages and review periods for hourly employees. Salaried employees' wages and benefits vary vastly across the country; they seem to hinge on individual negotiations between local managers and personnel. I have watched hourly employees get regular reviews and wage increases while salaried personnel in the same location were completely overlooked for three and four years at a time. Is this legal? Is this discrimination?

A. The government only requires an employer to pay its employees the minimum wage. An employer is not legally obligated to offer annual merit increases or cost-of-living adjustments. Hourly employees, who are sometimes unionized, may have a contractual agreement with an employer that may require an employer to deliver merit and cost-of-living increases to its members. It is unfortunate that your company does not see fit to reward its employees for their work. However, such increases are considered voluntary, and based on your description, do not appear discriminatory.

Am I salaried or hourly?

Q. I recently hired on to a new company and could use some advice. On my second interview with my new company, I was offered a salary on a yearly basis. I accepted this offer and began work. The paperwork I signed accepting this offer also had the same figure termed as "annual."

After one month of working, the company was purchased by a leading retailer. They announced this to all the employees and said that we would be a wholesale division of the retailer. When I received my "Welcome to the team!" letter from this retailer, I was addressed as an hourly employee. This was surprising, to say the least. I thought I accepted a salaried position and now I'm being classified as hourly. After all, I was offered compensation termed as "annual," I don't "punch" in or out (or any other time sheet for that matter), and I came from a salaried position at my former employer. Therefore, I was sure that there must be a mistake, so I directly went to the individual who made me the offer not six weeks earlier. I explained my concern to him and he told me he would get back to me.

After a week I asked him about it again and he told me that there is a federal law that says only certain positions are eligible for salaried compensation and I do not meet those requirements - specifically, the number of employees I directly supervise. Is there really a federal law concerning this situation?

A. Your company is right; there is federal law called the Fair Labor Standards Act that does require that certain jobs are either exempt or not exempt from the law. There are several tests that determine a job's exemption from the law. More information can be found at the Department of Labor's website. Without knowing the specifics of your job description, I have to say that it is possible that your job is not exempt and does requires your company to classify your job as nonexempt.

I know you may perceive this new classification as a bad thing however; I would encourage you to look at some of the positive aspects of this change. For instance, if you work more than 40 hours a week you will receive time and a half. If you have to come in on a weekend or holiday after you have worked for 40 hours, you may receive double time and a half.

Having said all that, I would ask your Human Resources Department to explain to you why your job has been recently classified as a nonexempt job. Even if you disagree with the decision you ought to be able to understand the rationale behind their decision. It's also important to keep in mind that regardless of whether you're job is exempt or not exempt from the federal law it is very important the company pay you a competitive rate. So, whether or not the company decides to change your status, make sure they pay you a competitive rate for the position.

The bottom line is, management personnel that can directly affect the profit or loss of a company by their supervision of personnel are salary employees, the rest should be hourly!