How to Prorate Salaried Semimonthly Payrolls per Day
Salaried semi-monthly employees are paid 24 times per year. Sometimes, you must prorate salary, such as when an employee is hired after the semi-monthly pay period starts or is terminated before the pay period ends. To prorate salary, you must determine the employee’s per day rate.
Salaried exempt semi-monthly employees receive a fixed salary, which is not based on hours worked. Under federal law, you do not have to pay these employees overtime if they work more than 40 hours for the week. To prorate the salary, divide the employee’s annual salary by the number of paid workdays for the year. Semi-monthly salaried employees are usually paid for 260 days a year, which is 52 weeks multiplied by five days per week.
A semimonthly payroll happens twice every month, such as on the 15th and the last day of the month. Assume that for your upcoming payroll on the 15th, the pay period for salaried employees runs from the first to the 15th. An employee was hired on the 11th of the month, which falls on a Monday. Pay her for five days, which is Monday through Friday, on the upcoming payroll. Let’s say you agreed to pay her an annual salary of $50,000. To arrive at her daily rate, divide $50,000 by 260 days to get $192.31. To arrive at her salary for the pay period, multiply $192.31 by five days, which amounts to $961.55.
Salaried exempt employees are usually paid for 2,080 hours per year, which is 40 hours multiplied by 52 weeks. To arrive at their hours for the pay period, divide 2,080 by 24 pay periods, which equals 86.67 hours.
Before you prorate -- or deduct from – an exempt employee’s salary ensure that it’s legally allowed. The Fair Labor Standards Act is the federal law that determines the conditions under which exempt employees’ salary can be deducted. Permissible deductions include to offset payments made to the employee for military pay or jury or witness fees, for unpaid disciplinary suspension, for unpaid leave taken under the Family Medical Leave Act and if the employee takes more benefit days than she has available. Salaried exempt employees usually receive a full day’s pay even when they take a partial day off.
Some salaried employees are non-exempt, which means they qualify for overtime if they work more than 40 hours for the week, under federal law. These employees receive a base salary, which is contingent upon them working a specific number of hours per week. In this case, you prorate the salary based on the employee’s work hours. This method requires that you determine her regular hourly pay rate. Divide her salary for the pay period by the number of hours salary is based on. For example, $50,000 divided by 24 pay periods comes to $2,083.33, which is her semi-monthly salary. Divide $2,083.33 by 86.67 hours to get hourly rate of $24.04.