A lot of the decision involved in this depends on the job functions and sometimes, the state you are located in.
There are many legal issues surrounding hourly vs. salary. There is "salary-exempt" and "salary non-exempt". Exempt employees don't receive overtime pay; nonexempt employees do. The classification criteria for exempt and nonexempt workers are part of the Fair Labor Standards Act, or the FLSA, which is the federal law that governs minimum wage, overtime pay and working hours.
The general federal guideline is that if an employee is not managing or supervising, he/she must be paid hourly. There are exceptions to this for certain sales and other professional positions; however, use caution as there have been many successful lawsuits against employers over the years for abuse of salaried positions.
I would recommend you first make the determination as to how to legally classify your employees, then consider the impact on service culture.
Feel free to contact me to discuss this in further detail.
