What Is a Prorated Salary?

  Reviewed by: Jayne Thompson, LLB, LLM
  Written by: Ruth Mayhew      Updated October 25, 2018
EMPLOYERS HAND HANDING...

Salaried employees expect each paycheck to be the same every payday, whether they're paid semi-monthly or every other week. There are, however, instances where the employer's payroll processor may be instructed to calculate the employee's prorated salary. In this case, the employee receives less than she would earn if she was doing a full-time job.

Tips

  • If a person works part-time hours or is absent from the job for some reason, then she will receive the amount of the full-time salary proportionate to the hours worked. Employers call it a prorated salary.

Salaried Basis Pay

Salaried employees earn a predetermined amount for a set number of hours which is usually on a full-time schedule – 40 hours per week in most industries. For example, a job candidate who accepts a position that pays $50,000 a year receives that amount divided by the number of paydays. If she is paid every two weeks, her paycheck is approximately $1,923.08 before taxes and other deductions. Regardless of the fact that she's paid on a salary basis, there is still an hourly rate calculation in the event adjustments are necessary for part-time working, absences or instances where the salaried employee will not receive her full pay.

Expectations for Salaried Employees

Generally, a salaried employee's pay cannot be docked for reasons such as lack of work, or if the employee's work product didn't meet the employer's performance expectations. Salaried employees usually don't use a time clock to track their hours; instead, they are depended on to work the number of hours to which they agreed and to complete the work they are assigned, regardless of how long it takes. In the case of a part-time employee, her salary may be expressed as a full-time annual salary, for example $50,000. But what she actually receives is a pro-rated salary proportionate to the number of hours worked. So, if someone worked half time or 20 hours per week, she would receive $25,000 in this example.

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Docking Salaried Employees' Pay

An employer can dock an employee's pay in certain instances but arriving late, leaving early or taking a long lunch is not among them. Docking a salaried employee's pay means the salary is prorated, based on the hourly rate. Instances where the federal government says it's OK to dock salaried workers' pay include:

  • When the employee has just started working or when he's leaving the job and hasn't worked a full week
  • Violating a safety rule
  • When the employee is required to serve on jury duty and the duty pay offsets the employee's regular pay
  • Absence for a full day or more for personal leave or sickness and the employee's lost wages are reimbursed by a disability plan
  • Unpaid disciplinary action or unpaid leave under the Family and Medical Leave Act.

How to Calculate Pro Rated Pay

First, calculate the hourly rate by dividing the annual salary by the number of hours the employee works each year. For a full-time employee who works a 40-hour week, that's 2,080 hours a year. For mathematical ease, ignore deducting hours for vacation and sick leave that she might take off from work. If the employer offers that benefit to its employees, she's paid for that time anyway so it's not be deducted from the year's hours. Using the 2,080-hour year and the $50,000 annual salary example, the employee's hourly rate would be $24.04. And, say the employee has decided to resign and works just two days in the pay period, her prorated pay would be $24.04 multiplied by two days' work, or 16 hours, which is $284.64, before taxes and other deductions.

About the Author

Ruth Mayhew has been writing since the mid-1980s, and she has been an HR subject matter expert since 1995. Her work appears in "The Multi-Generational Workforce in the Health Care Industry," and she has been cited in numerous publications, including journals and textbooks that focus on human resources management practices. She holds a Master of Arts in sociology from the University of Missouri-Kansas City. Ruth resides in the nation's capital, Washington, D.C.

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