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Hourly to salary is a conversion from an hourly wage to a regular salary.
With an hourly wage, you pay your employees a set amount per hour, multiplied by the variable number of hours worked. With a salary, a fixed amount is paid out at regular intervals—monthly, biweekly, or weekly—and full-time employees typically work around eight hours a day, five days a week.
Hourly to Salary Calculation
You may want to calculate the total pay if you’re taking an employee from hourly to salary. Below, we break down the calculations for yearly, monthly, and weekly salaries.
These amounts are pre-tax and do not include any additional benefits required by law or company policy—such as healthcare or pension contributions.
The following calculations are based on a full-time salaried role of eight hours a day, five days a week, 52 weeks a year.
Hourly to yearly salary
Yearly salary = Hourly wage x 8 x 5 x 52
If the hourly wage is $15, the yearly salary is $15 x 8 x 5 x 52 = $31,200.
Hourly to monthly salary
Monthly salary = Hourly wage x 8 x 5 x 52 / 12
If the hourly wage is $15, the monthly salary is ($15 x 8 x 5 x 52) / 12 = $2,600.
Hourly to weekly salary
Weekly salary = Hourly wage x 8 x 5
If the hourly wage is $15, the weekly salary is $15 x 8 x 5 = $600.
Hourly to Salary Additional Costs
Before transitioning an employee from hourly wages to a salary you should read the Department of Labor’s guidelines. You should also consult your state-level employment law and latest company policy to identify additional requirements associated with paying a salary, like minimum wage, overtime, paid leave, and disability insurance.
Common additional costs on top of the face-value hourly to salary conversion include healthcare and pension contributions. Your company may also include other discretionary benefits, including childcare contributions, gym membership, public transportation discounts, and more.
Hourly to Salary Pros and Cons
Transitioning an employee from hourly to salary pay comes with certain advantages and disadvantages to the business, which may equate to higher or lower employment costs. Besides financial obligations such as pension contributions and overtime pay, there are also qualitative factors like the reassurance of a stable working relationship.
Pros of Transitioning from Hourly to Salary
- Overtime savings: Salaried employees must perform their duties across a set number of hours per week. If they require more time to complete their tasks, your business does not need to pay overtime. By contrast, an hourly worker gets paid overtime beyond 40 hours a week at a 50% higher rate, as per FLSA guidelines.
- Greater certainty: A salary provides stability for both employee and employer. Salaried employees are expected to stay with the business for the foreseeable future. By contrast, hourly workers may not be available when the employer needs them, as they have greater flexibility over their schedule.
- Lower recruitment costs: Salaried employees have more opportunities to engage with their teams and company, leading to higher job satisfaction and lower turnover. Hourly workers can be less committed to team building and often have a higher turnover by comparison, inducing higher recruitment costs.
Cons of Transitioning from Hourly to Salary
- Healthcare costs: If you have over 50 employees, you must provide healthcare coverage to staff working 30 or more hours a week. This cost can be avoided if hourly employees work less than 30 hours per week on average.
- Workflow flexibility: When business is slower than usual—for example, during non-peak season in the hospitality industry—salaried staff still get paid, whereas hourly workers can be scheduled not to come in. While cutting hours isn’t ideal for hourly employees’ income security, it offers businesses the flexibility to assign tasks when they’re needed most.
- Employee lifestyle: Salaried staff may have a relatively less balanced lifestyle than hourly workers, who often have more control over their schedule and a clearer separation between work and personal life. Thus, employing staff on a salary can come with a higher risk of burnout and lower productivity.
Conclusion
An hourly-to-salary conversion estimates the total weekly, monthly or yearly amount you’d pay an hourly worker if they became a salaried employee.
On top of the standard hourly-to-salary calculation, there may be additional costs related to legal obligations at either federal, state, or company level. For instance, you may have to pay healthcare or pension contributions for salaried employees.
Finally, you should consider qualitative factors including job certainty and employee lifestyle when transitioning your employees from hourly to salary, as these can increase or reduce certain employment costs.
