Expert: Shirley McAllister, CPP, PHR - 12/8/2010

Question
A company in Illinois plans to change their payroll from bi-weekly to semi monthly. Hours worked from the 1st to the 15th will be paid on the 20th of the month, and hours from 16th to the 30th/31st will be paid on the 5th of the next month. how will overtime be addressed if in a pay period there are 11 working days = 88 hours for hourly employees?

Thanks!

Answer
Semi-monthly payroll is a time consumer for Payroll departments for hourly employees.

For hourly employees each week is considered for overtime per the FLSA (Fair Labor Standards Act). In the semi monthly payroll you will pay all the time for the weeks worked plus overtime for those weeks. For the partial week (1 day ) in this case you pay regular time on this pay period.  Than next pay period the Payroll department must add this 8 hours in to the time worked for the remainder of the week to figure the overtime on this week than subtract it back out to figure out the regular time for the rest of the week worked on the 2nd pay period.

I did it this way for a few years and I had an excel spreadsheet for the hourly employees so I could type in the hours from the partial week than the remaining hours from the rest of the partial week to figure the overtime for the payperiod in which the week was completed. I just literally hated it. It may have been cheaper because of two less payrolls, but it cost the company in my time because it too so long to figure out the hourly pay.

Shirley