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Healthcare Practices: Hourly vs. Salaried Employee Payroll (2026)
Hourly versus salaried in a healthcare practice is not a preference, it is the exemption test: a salary of at least $684 a week plus a duties test, and healthcare practices have industry-specific exemptions on top. Registered nurses at the national median earn $1,876 a week. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Who in a healthcare practice can be salaried and exempt
Hospitals and residential care establishments may compute overtime over a fixed 14 consecutive day work period instead of the 40 hour workweek, paying time and one half for hours over 8 in a day and over 80 in the period. The employer must have a prior agreement or understanding with the affected employees before the work is performed, and cannot use both systems for the same employee.
Shift differentials and non-discretionary bonuses such as attendance, retention and supplementary shift bonuses must be added into the regular rate before the overtime premium is computed. Paying time and one half of the base hourly rate alone is a violation when differentials are paid.
The salary math for healthcare practices
The standard salary level is $684 a week, $35,568 a year. BLS puts the May 2025 national median for registered nurses at $97,550, which is $1,876 a week, above the floor, so for that role the duties test is the whole question. 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 physicians and nurses 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.
- Hospitals and residential care establishments may compute overtime over a fixed 14 consecutive day work period instead of the 40 hour workweek, paying time and one half for hours over 8 in a day and over 80 in the period. The employer must have a prior agreement or understanding with the affected employees before the work is performed, and cannot use both systems for the same employee. [DOL Fact Sheet #54]
- Shift differentials and non-discretionary bonuses such as attendance, retention and supplementary shift bonuses must be added into the regular rate before the overtime premium is computed. Paying time and one half of the base hourly rate alone is a violation when differentials are paid. [DOL Fact Sheet #54]
Read the full guide to FLSA overtime rules for employers, and the rest of the healthcare practice payroll library.
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Frequently Asked Questions
Can a healthcare practice pay physicians 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. Hospitals and residential care establishments may compute overtime over a fixed 14 consecutive day work period instead of the 40 hour workweek, paying time and one half for hours over 8 in a day and over 80 in the period.
Does the $97,550 national median for registered nurses clear the salary test?
$1,876 a week is above the $684 floor, so salary is not the obstacle; the duties test is. BLS OEWS, May 2025.
What does managed payroll cost for a healthcare practice?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Shift differentials, on-call pay and credentialing-based pay tiers 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 Healthcare Practices. 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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