The major differences between a salaried employee and an hourly employee are the manner in which the two positions are paid and the amount of time each works. According to the federal Fair Labor Standards Act, an hourly or non-exempt employee is paid for each hour they work. For example, a server at a restaurant is typically paid per hour, and if they are asked to work more than 40 hours per week, they collect overtime pay. A salaried employee, on the other hand, only receives a set salary and is exempt from being paid overtime. Different states set different compensation rates for what constitutes exempt and non-exempt workers.