Expert: Shirley McAllister, CPP, PHR - 3/30/2010

Question
QUESTION: I found your one answer, but am having trouble I have an exempt EE who I need to dock, when I divide the annual by 260 for a daily rate and then multiply back, because there is 12 days in this payperiod it calcs out to more than their normal rate of pay.  What is the rule, divide the salary by the number of days each pay period as it varies, or by 86.67 to come up the hourly rate and then calc 86.67-8.0 x ?? to come up with their correct salary? As they are different amounts?

ANSWER: You can only dock an exempt employee for one full day of personal time, you cannot dock for sick time. You cannot dock in hours if the employee works part of a day he must be paid for the whole day. You can pay the time in vacation , personal or sick pay if he has it available.

How you calculate an hourly wage is take 52 weeks in a year x 40 hours in a week to get 2080 hours in a year of work time. (if the employee is scheduled 40 hours a week).

Divide the annual salary by 2080.  If the employee makes 50,000 a year than 50,000 divided by 2080 is 24.04 an hour. It would be the same as 52 weeks in a year times 5 days a week is 260 days in a year. Divide 50,000 by 260 to get 192.31 a day.

You should avoid figuring salaried exempt time in hourly increments and only figure it in days. It does not matter how many days in a pay period as salaried exempt are figured on an annual basis divided by the number of pay periods.

Salaried exempt do not have a rate of pay. They have an annual salary divided by pay periods throughout the year.

The 86.67 is simply the 2080 divided by 24 pay periods which equals 86.67 for each pay period.

Shirley



---------- FOLLOW-UP ----------

QUESTION: So in truth I will be paying her more for this payperiod than she would normally earn, because I am docking her a day of pay, and when you calculate that out it becomes more than her regular salary, so instead of getting 50,000 for the year, she takes a day off without pay and will earn $50,032.00 for the year, does not sit well with my CFO or President.

Answer
If the employee earns 50,000 a year and is docked 8 hours or 50,000 less 192.31 which is 49,807.69.

The 50,000 a year employee is being deducted one day of pay. So her normal salary would be 50,000 divided by 24 or 2083.34 per pay day. You would take the 2083.34 and deduct the 192.31 from it so this pay date she would be paid 2083.34 - 192.31 = 1891.03. How does this increase her annual wage?

Shirley