Expert: Shirley McAllister, CPP, PHR - 10/26/2011

Question
Thank you for taking the time to answer my question.  This is in reference to another thread you posted about moving from semi-monthly to bi-weekly schedules 5/11/09.  

You stated that "The proper way to do this is to figure out how much they have earned so far this year.  Subtract it from the total annual salary.  Then divide the amount left by the pay periods remaining so that they are paid the total amount but an equal amount on each of the remaining pay periods."

I could not agree with you more however, our last bi-weekly pay period will end on Dec 18th, paid on Dec 23rd.  I am being challenged with the logic that since the employee has not worked the last 10 days of the year we have to deduct it from the calculation.  In essence if someone made 30,000 a year last year, this year they will make 28,903 and next year they will make 30,000.  We are switching to bi-weekly after the 11/15 pay period ends.
Here is what the calculations look like baseed on a 30,000/year employee: As of 11/15 the ee made $26250. Nov 16-20 $346.15 (14.42*8*3) 11/21-12/04 $1153.85 12/05-12/18 $1153.85 for a total of 28,903.85

I think they should still be paid their annual salary of 30,000 and we need to adjust for it for the rest of the year.  Is there any rules regarding this that you can share with me?  Or is the "proper way" to do this just a business best practice?

Thank you!

Answer
There are no rules for doing this other than the one I just gave you which is basically an accounting rule.

It is mostly best practices. When there is an extra week in the year our company just covers it we do not divide by 27 like most companies. We are very good to our employees and almost all have been with the company for 10 years plus.

Shirley