iDear Workforce-I Should Pay Be Shown as Annual or Monthly or Hourly

June 25, 2000

Dear Workforce:

Which is most widely used on pay schedules and personnel records for exempt employees--monthly salary or annual salary? Our organization has always shown monthly minimum & maximum rates. Federal laws quote weekly rates. Most surveys, etc. ask for annual. Payroll has to convert to hourly. What is standard practice? I would appreciate any information on this subject.

--Fern Deatherage (formerly Hartman), Human Resource Officer, Missouri Valley Human Resource Community Action Agency, Marshall, MO


A Dear Fern:

Unfortunately, no easy answers on this one.

When it relates to standards, the best approach is to adopt a standard practice to track the rates that meet regulatory requirements and work best for your company and you. The following is some broad background information on the complexity of payroll considerations.

Personnel records usually track the employee's hourly, monthly and annual rate. Payroll records usually track the employee's pay period/cycle salary rate, which is based on their pay frequency/schedule (daily, weekly, bi-weekly, semi-monthly, monthly or annual). In addition, Payroll tracks the details of the employee's pay, i.e. gross pay, taxes, other deductions and net pay.

Salaried applicants are usually quoted an annual rate when they receive a new salaried job offer. Pay grades usually include a minimum, mid-point and maximum salaried rate. There are certain compliance requirements to consider, too. For example, in the United States, The Fair Labor Standards Act includes requirements to maintain employee records. The term "usually" is used intentionally to demonstrate that compensation rates are tracked for multiple reasons.


SOURCE: Ceridian, Minneapolis, May 11, 2000.

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