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Childcare Centers & Preschools: Hourly vs. Salaried Employee Payroll (2026)
Hourly versus salaried in a childcare center is not a preference, it is the exemption test: a salary of at least $684 a week plus a duties test, and childcare centers have industry-specific exemptions on top. Childcare workers at the national median earn $673 a week. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Who in a childcare center can be salaried and exempt
Since the 1972 FLSA amendments, preschools and daycare centers are covered enterprises regardless of annual dollar volume and whether public, private, for profit or nonprofit. Every nonexempt employee must be paid at least $7.25 per hour for all hours worked and overtime after 40 hours in each workweek, not after 80 hours in two weeks.
Bona fide preschool and kindergarten teachers may be exempt from minimum wage and overtime as professionals when their primary duty is teaching, under the same conditions as elementary school teachers. Preschool employees whose primary duty is caring for the physical needs of the children would ordinarily not meet the teacher exemption.
The salary math for childcare centers
The standard salary level is $684 a week, $35,568 a year. BLS puts the May 2025 national median for childcare workers at $34,980, which is $673 a week, below the floor, so that role is non-exempt regardless of duties. Paying a salary to a non-exempt employee is legal; it just does not remove overtime, which is then computed on the salary divided by hours actually worked each week.
What changes when a role moves between the two
Moving lead teachers and assistant teachers from hourly to salaried changes the pay code, the timekeeping rule and the overtime treatment at once. A salaried non-exempt employee still needs hours recorded every week, and a salaried exempt one needs the exemption documented against the rule above, because in an audit the burden of proving the exemption sits with the employer.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Since the 1972 FLSA amendments, preschools and daycare centers are covered enterprises regardless of annual dollar volume and whether public, private, for profit or nonprofit. Every nonexempt employee must be paid at least $7.25 per hour for all hours worked and overtime after 40 hours in each workweek, not after 80 hours in two weeks. [DOL Fact Sheet #46]
- Bona fide preschool and kindergarten teachers may be exempt from minimum wage and overtime as professionals when their primary duty is teaching, under the same conditions as elementary school teachers. Preschool employees whose primary duty is caring for the physical needs of the children would ordinarily not meet the teacher exemption. [DOL Fact Sheet #46]
Read the full guide to FLSA overtime rules for employers, and the rest of the childcare center payroll library.
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Frequently Asked Questions
Can a childcare center pay lead teachers a salary and skip overtime?
Only if the role meets an exemption: the $684 weekly salary floor plus the duties test, or an industry-specific exemption. Since the 1972 FLSA amendments, preschools and daycare centers are covered enterprises regardless of annual dollar volume and whether public, private, for profit or nonprofit.
Does the $34,980 national median for childcare workers clear the salary test?
$673 a week is below the $684 floor, so a role paid at that level is non-exempt on salary alone. BLS OEWS, May 2025.
What does managed payroll cost for a childcare center?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Licensing-tied payroll records, subsidy payment coordination and part-time variable-hour staff are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Childcare Centers & Preschools. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Overtime Pay Under the FLSA
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