Expert: Shirley McAllister, CPP, PHR - 12/18/2008

Question
Our company just notified us that they are changing from 26 to 24 pay periods per year starting 1-1-09.  Our company requires all employees (hourly and salary) to enter hours worked on an electronic timecard.  Our paychecks are generated by an outside payroll service based on our timecards.  Paychecks and timecards correspond with the start and end date of the payroll period clearly printed on top. I am a salaried employee.  The first paycheck received in 2008 showed a beginning date of 12-23-07 through 1-5-08 with 45 hours worked in 2007 and 20 hours worked in 2008.  The last pay period of 2008 is from 12-7-08 through 12-20-08.  This paycheck will be the 26th of the year and equal my annual salary.  The hourly employees will receive an interim paycheck for the last 10 days of Dec. 2008 but salaried employees will not even though salaried employees will continue to record hours worked, vacation and holidays during that time.  The next payperiod for salaried employees will start 1-1-09 through 1-11-09, with a check on 1-15-09.  My questions are: 1. Since a portion of the hours on the first paycheck of 2008 were worked in the previous year should salaried employees receive an interim check for the last 10 days of 2008?  2. The company has always paid for time worked in arrears and never pre-paid for time not yet worked. In that case how can they reconcile not paying us for hours worked the last 10 days of the year?  
Thank you very much in advance for any insight you can provide to clear up these questions. On behalf of 5 salaried employees.

Answer
The paycheck paid for 12-20th the 26th paycheck of the year completed your annual salary. That means you are all paid for the year of 2008. Nothing more is owed to you by the company for 2008.

Salaried employees do not work on hours but by the job. Thus your salary for the year is divided by the amount of payperiods and paid to you throught the year no matter how many hours are worked.

In 2008 you were paid your whole annual salary in the 26 payperiods.

In 2009 you will be paid your whole annual salary in 24 payperiods. That means that the annual salary is divided by 24 payperiods instead of 26 payperiods so you will be paid a little more on each pay period.

The hourly employees get a check because they are paid for every hour they are worked so the extra hours do count for them. Salaried exempt do not because they have been paid their total 2008 salary in the 26 pay periods they worked.

If you earn 50,000 a year and work 26 pay periods you are paid a salary of 1923.07 for each pay period for the year. When that is paid your annual salary has been paid.

If you earn 50,000 a year and work 24 pay periods you are paid a salary of 2083.33 for each pay period for the year. When tha tis paid your annual salary has been paid.

It is not the same if you are hourly because you are not paid as set annual salary but you are paid say 20.00 an hour for every hour you work.

No salaried exempt will not receive a check for the extra days as their wages have been already paid for the year.

Shirley