Hourly vs Salaried Pay Stubs: Overtime and Pay Periods

Hourly and salaried pay stubs look similar, but the earnings section is built differently. Knowing how each is calculated helps employers get payroll right and helps workers check their pay.

Hourly pay stubs

For hourly workers, gross pay depends on the time worked. The earnings section usually lists:

• Regular hours and the regular rate
• Overtime hours and the overtime rate
• Any other pay types, such as holiday, sick or shift differential

For example, an employee paid $20 an hour who works 40 hours in a week earns $800 in regular pay for that week.

Overtime under federal law

Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid at least one and a half times their regular rate of pay for hours worked over 40 in a workweek. A few points trip people up:

• It is per workweek. A workweek is a fixed, recurring period of seven consecutive days. Hours cannot be averaged across two weeks, even if pay is biweekly.
• The regular rate can include more than the hourly wage. Certain bonuses and shift differentials may need to be included when calculating it.
• States can add rules. Some states require daily overtime or have other overtime rules that go beyond federal law. Where state and federal law differ, employers generally must follow whichever is more protective of the employee.

The U.S. Department of Labor explains the basics at Wages and the Fair Labor Standards Act.

Overtime example

For example, the $20-an-hour employee works 45 hours in one week:

1. Regular pay: 40 hours x $20 = $800
2. Overtime rate: $20 x 1.5 = $30
3. Overtime pay: 5 hours x $30 = $150
4. Gross pay for the week: $950

If the same employee is paid biweekly and works 45 hours in week one and 35 in week two, they are still owed 5 overtime hours for week one. The 80 total hours do not cancel it out.

A note on the overtime deduction

Federal law now allows eligible individuals to deduct part of their qualified overtime pay on their income tax return for tax years 2025 through 2028, generally the "half" portion of time-and-a-half, within annual limits. Starting with 2026, employers must report qualified overtime compensation separately. Overtime is still taxed normally in payroll unless the employee submits a W-4 that accounts for the expected deduction. The IRS explains this in its questions and answers on the overtime deduction. A tax professional can help with individual situations.

Salaried pay stubs

For salaried employees, gross pay per period is the annual salary divided by the number of pay periods in the year. For example, with a $52,000 salary:

• Weekly (52 periods): $1,000
• Biweekly (26 periods): $2,000
• Semimonthly (24 periods): about $2,166.67
• Monthly (12 periods): about $4,333.33

The stub usually shows the salary amount for the period rather than hours times a rate, although some employers list standard hours for reference. Our guide to pay frequency compares the schedules in more depth.

Exempt vs non-exempt

Being paid a salary does not by itself mean an employee is exempt from overtime. Under the FLSA, an employee is exempt only if the job meets specific tests, generally including a minimum salary level and a duties test (for example, executive, administrative or professional duties). A salaried employee who does not meet the tests is non-exempt and must receive overtime for hours over 40 in a workweek.

For a non-exempt salaried employee, the regular rate is typically worked out from the weekly salary and the hours it is meant to cover. Employers who are unsure about classification should review Department of Labor guidance or speak with an employment law professional, since misclassification can lead to back pay liability.

What else changes between hourly and salaried stubs

• Hours shown. Hourly stubs need accurate hours; salaried stubs may not show hours at all for exempt staff.
• Variable net pay. Hourly net pay moves with hours worked, so withholding changes too.
• Paid time off. Hourly stubs often list PTO hours as a separate earnings line; salaried stubs may not separate it.
• Recordkeeping. For non-exempt employees, the FLSA requires employers to keep records of hours worked each day and each workweek. See pay stubs for small business owners.

Building either kind of stub

In PayStubNest you can create a pay stub for either type: enter hours and rates (including overtime hours) for hourly workers, or an annual salary and pay frequency for salaried staff. Withholding and year-to-date totals are calculated for you. To understand each line of the result, read how to read a pay stub.