I am having a debate with the HR Director on how the hourly rate is calculated for a salaried non-exempt employee with following scebario.. NYS,hours is 9-5, M-F, $50,000 per year. As a payroll specialist, I calculated it this way: 50,000/52 weeks/37.50 hrs (i deducted the half hour lunch per day mandated by NYS law) = $25.64 hourly rate Our HR department insisted on the following method: $50000/52 weeks/ 40hrs ( 30-min lunch break included in hours) = $24.04 hourly rate. Which method the correct and compliant with FLSA and NYS law? Posted by Ginas
A couple of questions for clarification: 1. We need to understand the NY law regarding mandatory half hour lunch. Is this mandatory time off paid time off? 2. What are you using the calculation for? 3. This cannot be a new issue. Historically how has this been handled?
I assume it is obvious to you that Hr assumes in a full year they are paid for 2080 hours. Your method in a year compensates them for 1950 hours. If you expect to pay the employee the full agreed to wages of $50,000 after a full year, the payroll method will always underpay them with no overtime worked......
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Posts: 205Joined: 3/4/2009Last Post: 1/9/2014
Re: calculating hourly rate
Agree that it will also depend on what you are using the calculation for!
This is a really great article about non-exempts being paid salaried and what becomes their Regular Rate of Pay for OVERTIME calculation purposes -- that is PAYROLL purposes.....
http://www.payroll-taxes.com/articles/1071-non-exempt-salary-calculation.htm "...Therefore, if a non-exempt employee is paid a salary, the employer and the employee must come to an understanding that the salary covers a fixed number of hours in each workweek. [29 CFR 778.113(a)] So the employee’s regular rate of pay can be calculated by dividing the number of hours expected each week into the weekly salary. For instance, suppose a secretary is hired to work from 9:00 am to 5:00 pm each, and she has an hour off for lunch. She would be working a 35-hour workweek. If she is paid $350 per week, then her regular rate of pay is $10 per hour ($350 / 35 hr)...."
So your calculation is correct when trying to calculate a regular rate of pay and overtime premiums. However, in HR/benefits often salaries relate to the actual benefit (401k match, disability payments, etc). Many many times, I have seen the hourly rate calculated at an assumed 2080 hrs per year (or 40 per week).
So in reality you could both be correct for different reasons
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