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Technology & SaaS Companies: Hourly vs. Salaried Employee Payroll (2026)
Hourly versus salaried in a technology company is not a preference, it is the exemption test: a salary of at least $684 a week plus a duties test, and technology companies have industry-specific exemptions on top. Software developers at the national median earn $2,615 a week. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Who in a technology company can be salaried and exempt
Computer systems analysts, programmers, software engineers, and similarly skilled workers are exempt from minimum wage and overtime under sections 13(a)(1) and 13(a)(17) if they meet the duties test and are paid either on a salary or fee basis at the standard salary level or on an hourly basis at not less than $27.63 an hour.
The computer employee exemption does not cover employees who manufacture or repair computer hardware, or workers such as engineers and drafters whose jobs depend heavily on computers but who are not primarily engaged in systems analysis, programming, or similarly skilled computer work.
The salary math for technology companies
The standard salary level is $684 a week, $35,568 a year. BLS puts the May 2025 national median for software developers at $135,980, which is $2,615 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 software engineers and product managers 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.
- Computer systems analysts, programmers, software engineers, and similarly skilled workers are exempt from minimum wage and overtime under sections 13(a)(1) and 13(a)(17) if they meet the duties test and are paid either on a salary or fee basis at the standard salary level or on an hourly basis at not less than $27.63 an hour. [DOL Fact Sheet #17E]
- The computer employee exemption does not cover employees who manufacture or repair computer hardware, or workers such as engineers and drafters whose jobs depend heavily on computers but who are not primarily engaged in systems analysis, programming, or similarly skilled computer work. [DOL Fact Sheet #17E]
Read the full guide to FLSA overtime rules for employers, and the rest of the technology company payroll library.
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Frequently Asked Questions
Can a technology company pay software engineers 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. Computer systems analysts, programmers, software engineers, and similarly skilled workers are exempt from minimum wage and overtime under sections 13(a)(1) and 13(a)(17) if they meet the duties test and are paid either on a salary or fee basis at the standard salary level or on an hourly basis at not less than $27.63 an hour.
Does the $135,980 national median for software developers clear the salary test?
$2,615 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 technology company?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Equity compensation handling, remote employee multi-state tax and contractor classification 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 Technology & SaaS Companies. 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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