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Converting Bi-Weekly Employee to Semi-Monthly
Benefits & Compensation
Converting Bi-Weekly Employee to Semi-Monthly
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What is the best way to compute the correct wage for a bi-weekly hourly employee changing to a semi-monthly payroll. I know with salaried employees, the hourly calculation would be 86.67 hours. Would
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Forums » Topic Forums » Benefits & Compensation » Converting Bi-Weekly Employee to Semi-Monthly
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Converting Bi-Weekly Employee to Semi-Monthly
posted at 12/1/2008 10:42 AM EST
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Posts: 92
First: 2/4/2002 Last: 3/28/2011 |
What is the best way to compute the correct wage for a bi-weekly hourly employee changing to a semi-monthly payroll. I know with salaried employees, the hourly calculation would be 86.67 hours. Would this be the same in this case?
Thank you. |
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Converting Bi-Weekly Employee to Semi-Monthly
posted at 12/2/2008 7:59 AM EST
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
The best way for hourly employees is to first determine the correct hourly wage. This does vary based on the pay frequency. It is either spelled out by contract or offer letter. If you have to convert a weekly wage or bi weekly wage to an hourly wage just divide the weekly or bi weekly by 40 or 80.
Once you have the hourly wage then the regular amount would be 86.67 times the hourly wage BUT only if that is what is turned in on the time sheets. Hourly staff must always have signed time sheets as the basis for wages. |
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Converting Bi-Weekly Employee to Semi-Monthly
posted at 12/2/2008 8:39 AM EST
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
And you need to look at workweeks and how your company has defined yours.
I strongly suggest reading through the following article: http://www.payroll-taxes.com/articles/overtimeBasics.html Most payroll professionals will tell you to have all hourly employees on a biweekly payroll if possible because it works out to exactly 2 workweeks. Semi-monthly will very rarely do so. If the person works OT, the calculations get hairy. Some payroll systems handle it well, others do not. And like the other poster stated, you MUST pay (at least) for actual hours worked. " It is important to recognize that the payroll period actually has nothing to do with the calculation of overtime. It is the workweek that is the basis for all overtime calculations. [29 CFR 778.103] One of the biggest mistakes occurs when an employer has a biweekly payroll period, and the employer assumes that the maximum number of hours that can be worked is 80. Each workweek must stand alone. [29 CFR 778.104] Semi-monthly and monthly payrolls are especially problematic because they do not conform to any workweek. " Say you assume 86.67 for a semi-monthly check. You still need to look at the total hours worked in the workweeks to see if there was overtime or any other extra hours...for example, if the pay period was the 15th through the 31st, that is 17 days...not 14, so it crosses 3 workweeks. I CAN'T STATE THIS STRONGLY ENOUGH -- that is one of the major pros for biweekly payrolls is the ease of OT calculations and one of the major negatives for semimonthly is OT calculations. |
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