Hourly Rate
Pay rate calculated per hour worked.
An hourly rate is compensation calculated and paid based on the number of hours worked. Hourly employees are typically non-exempt under FLSA and entitled to overtime. The federal minimum wage is $7.25/hour, but many states and cities set higher minimums. Hourly rates vary dramatically by industry, skill level, and geography.
Example
A retail associate earns $16/hour and works 35 hours in a week, earning gross pay of $560 before deductions.
Why It Matters for Your Business
Hourly rates directly affect labor costs, scheduling decisions, and overtime exposure—setting them correctly balances competitiveness with profitability.
Related Terms
More Payroll Terms
Employee Benefits
Non-wage compensation like health insurance and retirement plans.
Gross Pay
Total earnings before any deductions.
Net Pay
The amount received after all deductions.
Overtime Pay
Additional compensation for hours worked beyond 40 per week.
Salary
Fixed annual compensation regardless of hours worked.
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