Payroll Accounting 2010 Bernard J. Bieg and Judith A. Toland. CHAPTER 5 CHAPTER 2. CHAPTER 2 . COMPUTING WAGES & SALARIES. Developed by Lisa Swallow, CPA CMA MS. 0. Fair Labor Standards Act (FLSA). Federal Wage & Hour Law provides for two types of coverage
Federal Wage & Hour Lawprovides for
two types of coverage
Manyfamily businesses are exempt!
*40 hours x $2.13/hour = $85.20
“Exempt” means exempt from some, or all, of FLSA provisions
Note: Putting someone on salary
doesn’t mean he/she is exempt!!
Violations of child-labor provisions can result in up to $11,000/offense
Most common pay periods are as follows
ER can have different pay periods for
different groups within same company!
There are two methods
These methods result in same total gross pay!
Used to calculate pay for salaried nonexempt employees
FACTS: Salary quoted is $2,000/month – paid semimonthly - 4 hours OT in one pay period
FACTS: Salary quoted is $2,000/month for 38 hour work week - paid semimonthly. Two rates in addition to semimonthly gross (regular pay between 38-40 hours/week; 1.5 after 40 hours). Of 16 hours of OT in one pay period only 12 over 40.
FACTS: Salary quoted is $1,600/month for 35 hour work week -paid semimonthly. OT is calculated as regular hourly pay between 35-40 hours/week; 1.5 after 40 hours. Of 16 hours of OT in one pay period, 6 hours are over 40 hours weekly.
FACTS: Salary quoted is $2,200/month -
paid biweekly - 11.5 hours OT in one pay period
[(Units produced in OT) x (1.5 x piece rate)]
Note: two methods don’t give same results!!
FACTS: 4,812 units inspected in a 47.25 hour week (600 of those units produced in extra hours). Employee is paid .12 per unit. Calculate gross using both methods.
FACTS: Inspection rate = $.08/unit. An EE inspected 6897 units in 43.5 hours. She inspected 423 of these in overtime. Calculate using both methods.
FACTS: Sam sold $40,000 of product. His quota is $31,500. He gets 2% in excess of quota. His annual base salary is $30,000. He gets paid biweekly