Salary-based vs Hourly?

Question

I am a contractor and offered a choice between hourly or salary-based by a contracting agency. I am being offer hourly as of now; but i can change it to salary. I used to get paid salary and per dieum. They usually split my paycheck (if it's slary) to half per diem and half salary. So if I get paid $10K per month; $5K would be my salary and the other $5K is per dieum.
There's no such thing as hourly. What is the best? I already bought a $28K car which I will use for this job.
Thanks.

Answer 1

I'm not sure I understand your question, but i'm taking a stab at whether you want to be an hourly employee or a salary employee. They each have pros and cons, so it depends on what's important to you.

As an hourly employee you receive pay for overtime. That's always pretty cool. However, you are docked for absenses on an hourly basis. You miss an hour, you lose an hour. Miss a day, lose a day.

As a salary employee, they cannot dock you for hours. I believe you have to cross the half-day mark before they can reduce your pay. However, they can expect you to stay and work longer without additional compensation.

What's throwing me is the per diem. There is no per diem pay structure. A per diem is usually in addition to your wage to cover certain kinds of expenses. You should still have one regardless of what you choose to do. Both qualify for benefits, if offered, and they are full-time positions.

Personally, I prefer salary. I always know exactly what I'm taking home, because sometimes my schedule gets clipped due to lack of work. They still have to pay me. An hourly employee they would not.

Answer 2

All other things being the same, hourly is the way to go.

As many here have said, "salaried" usually means "unpaid overtime". I know of virtually no one who is salaried who actually gets to work less than 40 hours per week.

Are there any benefits being offered at all, like health insurance, life insurance, 401K, etc? Will the "hourly" pay (assuming a 40 hour work week) be equal to what the are offering you as a salaried employee? If there are no differences in benefits or the size of your paycheck, go with the hourly pay. One thing to keep in mind is Social Security payments....will they differ between the salaried and hourly rates, given that they were splitting up the salaried pay into salary and per diem expenses? I don't think per diem expenses have FICA taxes taken out, but then again, your employer won't pay their half of the FICA taxes on that amount either. That could be a consideration.

Answer 3

One thing to remember about salary-based pay: You get the same pay no matter how many hours you work. Depending on what type of work you do, employers may take advantage of salaried employees. Best thing to do is compare them side-by-side by multiplying the hourly wage by 40 (that would be one week's pay) and then compare it to the salary they're offering you. If the salary is considerably higher than the hourly and there is little or no overtime involved, take the salary-based pay. If they're close, stay hourly.

Answer 4

Usually a salary based position does not get the benefits of 8 hours. The wages stay the same no matter how many hours you work. As far as financially have no clue. You will have to find what the company policies are and go from there.

Answer 5

If you go salary, at least get some health insurance.

Watch out for the trap of being salaried and then giving all your time with no overtime.

Answer 6

Hourly you'd have to provide your own benefits (or at an astonishing rate). best rule of thumb. If you're a non-accident prone single man go for hourly. wife+kid go salary

Answer 7

A salaried person might still get overtime. Employer can be required to pay overtime even to salaried people depending on their job responsibilities and on their salary.

Answer 8

Near the end of you question you state 'There's no such thing as hourly.' If that is true, you question is nonsense.

Answer 9

With hourly, you get overtime!

Answer 10

hourly is great for overtime pay