A manager's pay structure derives from factors such as industry, employer and individual job duties. A manager who is paid hourly receives wages based the number of hours worked in a week. A manager who is paid a salary receives a flat sum for all hours worked. There are benefits and drawbacks for both structures. The Fair Labor Standards Act governs which types of managers meet eligibility requirements for hourly pay and which are eligible to receive a salary.
Minimum Pay Requirements
A manager's pay requirements are subject to a salary or fee basis or the minimum wage required in the state of employment. A salary basis is a minimum amount a salaried worker is entitled to receive based on overall job duties. The minimum amount a salaried manager is entitled to receive is $455 per week. A nonsalaried manager's pay cannot be less than the federal minimum wage of $7.25 per hour. Nonsalaried managers who perform certain computer-related duties may be entitled to a pay rate of at least $27.63 per hour.
A manager's exemption status determines whether he receives a salary or hourly wage. A manager can be an exempt or nonexempt employee. Exemption status is typically based on the employee's job duties. Exempt managers receive a specific salary regardless of the number of hours worked during the week. A nonexempt manager receives an hourly wage and must be paid for each hour worked during the week, including overtime.
The Fair Labor Standards Act determines what job duties a manager must perform to be considered exempt or nonexempt and receive a salary versus an hourly wage. According to the act, to be considered exempt, the job duties of an administrative level manager must be "directly related to management or general business operations." In other words, the employee must perform general managerial activities such as hiring, employee discipline and quality control. Managers whose duties are not of an executive, administrative or professional nature are considered nonexempt and receive an hourly wage.
Managers who earn an hourly wage versus a salary have certain rights and protections under the FLSA. Most notably, nonexempt managers who receive hourly pay are entitled to a minimum wage and overtime pay. According to fair labor standards, overtime pay is one and one-half times the hourly rate of pay after 40 hours worked during the week.
- U.S. Department of Labor: Compensation Requirements: Salary Basis or Fee Basis
- U.S. Department of Labor: Compliance Assistance: Fair Labor Standards Act (FLSA)
- U.S. Department of Labor: FLSA Overtime Security Advisor
- U.S. Department of Labor: Fact Sheet #17C: Exemption for Administrative Employees Under the Fair Labor Standards Act (FLSA)
- Young manager image by NiDerLander from Fotolia.com