Expert: Shirley McAllister, CPP, PHR - 3/28/2010

Question
Hi. Although I did not complete my BBA, I have been worked as an accountant and accounting manager in the past. Recently, I've gone to work in a healthcare office that is run by the doctor and his wife and the doctor figures the payroll. We are having a friendly debate about how salaried payroll should be computed if an employee is out sick or takes a day off. We are paid bi-monthly. My stance is that the bi-monthly salary should be multiplied by 24 (or the monthly by 12#, then divided by 52 weeks. Here's where we get into a problem: We work a 36-hour week comprised of 4.5 days #Fridays are 8a-12n). I say once you've divided down to the weekly salary, you then divide by 36 hours and then multiply the hourly x how many hours worked or I prefer to multiply the hourly x hours not worked and subtract from the weekly salary. The doctor computes each month differently, depending on how many work days are in that particular month. I had never come across that way of computing payroll in all my 35 years of working. Of course, if no days or hours are missed, it's a moot point because it will be the bi-monthly salary less withholding taxes. It's only when you get into someone having to be off for whatever reason--whether they have sick days, vacation time or not. Please help!

Answer
Salaried payroll is not figured on hours worked or not worked or hours at all!

Salaried exempt payroll is an annual figure divided by the number of pay periods which he company decides to pay. The company can pay 12 a year (monthly), 24 a year (semi-monthly) or 26 a year (bi-weekly). It is up to the company how many pay periods it wishes to pay in a year.

Than the salary is divided by that many payperiods. Say the employee earns 50,000 a year.
The salary would be the same every pay period.

Monthly would be 4166.66 a pay period
Semi-Monthly would be 2083.33 a pay period
Bi-Weekly would be 1923.08 a pay period

If the employer offer's sick pay, vacation pay or PTO it may be used when a salaried employee takes a day off. The DOL says the salaried employee must be paid for the whole day if he is sick or if he is off part of the day, but they do not care which pot it is paid from. Sick pay, PTO and vacation pay are fringe benefits given by the employer and not mandated by law.

If no vacation , PTO or sick pay is available the whole salary must be paid if the employee works part of a day or is off sick for a day.

If the employee is off work one whole day for personal reasons he does not have to be paid for that day.

Shirley