You may pay most executive, administrative, and professional employees a salary. You may also pay highly paid employees, outside sales employees, computer systems analysts and programmers a salary. These employees have high-level management duties, autonomy, supervise others, make important business decisions, and have a fair amount of authority.
You must pay everyone else by the hour. These are employees who make things and serve the customers. If these employees work more than eight hours a day or more than forty hours per week, you must pay them overtime wages.
If you pay someone a salary when you should have paid them by the hour, you may be subject to an overtime claim. You might have to pay liquidated damages (double unpaid overtime), unless you acted in good faith and reasonably believed there was no wage violation. You can limit your risk by getting DOL approval of your classification or an opinion from legal counsel.
You must pay all nonexempt employees at least a minimum wage. You’re required to post certain notices regarding pay. You must pay equal pay and benefits to men and women who do the same or equivalent work. There are laws for tips and commission. You don’t have to pay for commuting time, meal and rest breaks (if employees are relieved from all duties), or on-call time controlled by the employee for their own enjoyment or benefit.
Make sure you follow payroll tax rules for withholding taxes, cost of meals, housing, transportation, loans, child support, alimony, insurance premiums, debts and wage garnishments, etc.