Accounting, Payroll & Pension Issues/salary in 2013 over 27 pay periods

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Question
I am a salaried employee, paid every two weeks.  My contract states I will be paid a fixed amount every two weeks.  My employer is just recognizing that there will be 27 pay periods in 2013.  The first pay was 01/01/2013, for time worked 12/12 to 12/27/2013.  My employer states that their obligation to me will be complete after the 26th pay period and is threatening to either decrease by pay by 20% each for the remaining five pay periods of 2013 or to not pay me for the last pay period.  How should this be accurately reimbursed?

Answer
Salaried pay is figured on an annual salary divided by the number of pay periods in the year.

They should have divided your salary by 27 for the  year to get your pay each pay period.

The easiest way to fix this is to divide the 2014 salary by 27 and have the first payday start on January 1, 2014. This would be one day late on Wednesday than it could go back to Tuesday for the rest of the year.

They would have to divide the annual salary by 27 payperiods to get your biweekly amount (every two weeks) you would have 27 payperiods in 2014 and only 26 in 2013. This would ve the easiest, quickest and best way to do this payroll as you will have been paid your total annual salary when the 26th payroll comes around in 2013 as they only divided your annual wage by 26 not taking into account the extra payday in 2013.

If they do not want to do this they have to add up all the payrolls already paid. Than they have to subtract that from your annual wage and divide the remaining payrolls by the amount left to pay in 2013.

So if your wage is 50,000 a year (for example) andf you are paid 26 paydays a year you are paid 1923.08 gross for each payday.  With the 27 paydays you should have been only paid 1,851.85 each payday.

So if you were paid 1,923.08 each payday there has been already 22 paydays paid and only 5 left to make 27 paydays. So if they do not want to use 2014 for the 27 paydays they must take the 50,000.00 and subract 22 x 1923.08 for a total of 42,307.76 subtracte from 50,000 would leave 7692.24 to be paid out over 5 payperiods. So now they have to take the 7692.23 and divide it by 5 payperiods. You would than receive 1538.45 each payperiod for the remaining of the year. Than you would be 27 payperiods in 2013.

Shirley

Note: however they figure it you should only be paid your annual wage by the last check you receive in 2013. So if it is 50,000 that is what should be received in 2013 and should be on your W-2 form.

Accounting, Payroll & Pension Issues

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Shirley McAllister, CPP, PHR

Expertise

I can answer payroll questions, payroll tax questions, 401K questions. No stock option questions please and I have some knowledge of other pensions but am most familiar with the 401K pension. I can answer U.S.and Canada payroll questions proficiently and have a good general knowledge of UK and South Africa and some knowledge of Australia and New Zealand Payroll procedures. Please do not ask me homework questions I do not have time to answer them.

Experience

25 years with an international company in the Human Resources, Payroll and Payroll Tax areas.

Organizations
SHRM, APA, I.O.M.A.

Publications
I.O.M.A. and BNA

Education/Credentials
P.H.R., C.P.P., Canadian Payroll Administrator, Successfully passed APA class on UK Payroll Administration. Boise State University Human Resource Certification

Awards and Honors
APA Hotline Citation of Merit for last 8 years.

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