Base salary is a fixed amount of money paid to an employee by an employer in return for work performed. A base salary does not includethe benefits,bonuses,or other potentialcompensation an employee might receive in addition to the base salary.
Find out more about base salaries, including who receives one and what is and isn't included.
What Is a Base Salary?
A base salary is the initial, standard amount of money that you are offered by the employer to do a specific job.
Base salary does not include additional compensation such as:
- Health insurance
- Bonuses
- Commissions
- Stock options
An employee who is paid a base salary is expected to complete a whole job in return for the base salary. They are also generally expected to work at least 40 hours a week to accomplish the requirements and goals expected of the job.
- Alternate name: Base pay
How Base Salary Works
Base salary is determined by a couple of factors, including market pay rates for people doing similar work in similar industries in the same region, the available people able to perform this work, and the pay rates andbase salary rangesestablished by an individual employer.
Base salary is also dependent on market pay outside of the company’s region as desirable skills become more difficult to recruit and employers raise base pay rates to compete for the talent they need.
Note
Base salary is typically paid at regular intervals. Most common is biweekly, with an annual salary divided into 26 evenpaychecksover the course of the year.
Smart employers assign goals and measurable outcomes to jobs that pay a base salary. This enables both the employer and the employee to determine that the employee is, in fact, performing the whole job for which they receive the base pay.
Who Receives a Base Salary?
Base salaries are usually paid to professional or exempt employees—workers who meet the criteria for exemption from federal overtime laws under the Fair Labor Standards Act (FLSA). Generally, these are professional, administrative, executive, or computer-related employees, and they must earn more than $684 per week and meet other tests as to their job duties to be exempt from the requirement that they be paid overtime.
Asalaried employeeis not required to track the number of hours worked and is not paid forovertime.
This is different from anon-exempt or hourly employee,who is paid an hourly rate or by the piece produced.This non-exempt employee is generally eligible to collect overtime for hours worked over 40.
Note
Employers who fail to accurately pay employees, including their obligated overtime payments, are subject to fines and potential litigation.
For example, say you are a human resources manager for a mid-size company. You might receive a base salary of $110,000, not including your benefits, which could include vacation time and health insurance. Those valuable perks would increase your actual compensation beyond the base salary.
How Much Is a Competitive Base Salary?
Base salaries can vary greatly depending on the employer, the position, the geographic area of the company and/or the employee, the duties involved, and other factors. But you can find out more about general salary ranges from a number of sources.
A solid resource for base salary information is the U.S. Bureau of Labor Statistics (BLS). The BLS offers wage and salary data for specific positions in various industries as well as for people who work in specific geographic locations. You can also see data by job classification, job characteristics, industry, occupation, gender, state, and metropolitan area. You can see information not only about pay but about benefits as well.
The Society for Human Resource Management provides more base salary information to employers throughthe SHRM Compensation Data Center. Many companies participate in base salary market surveys to create a trustworthy resource for base salary research.
Other places to research about base salaries include base salary calculators and extensive resources available from sites like PayScale.
These sites allow an employer to input detailed factors relating to the job and region to see the range in base salaries that particular positions pay. It also allows your candidates to see the same information, removing an advantage that employers once had in the past, putting both parties on equal footing in a base salary negotiation.
Key Takeaways
- A base salary is the fixed amount of money paid to an employee in exchange for work performed. It doesn't include bonuses, benefits, or other compensation an employee may also receive.
- Base salaries are usually paid in even amounts at regular intervals, such as biweekly.
- Competitive base salaries can be used to attract and retain top talent.
- Information on base salaries can be obtained from a number of places, including the U.S. Bureau of Labor Statistics, and used in salary negotiations.
