The Payroll Book

CHAPTER 10Calculating Payroll

Now that you have all the time entered to pay your staff, you can calculate earnings. You will have to calculate gross pay, taxable pay, after-tax pay, and net pay.

CALCULATE EARNINGS HOURLY

Let's start with your hourly paid staff. You know your workweek and your pay period (see Chapter 7). How many of the recorded hours are in the workweek? If a non-exempt employee has more than 40 hours of worked hours in the workweek, and the company is subject to FLSA, then those hours in excess of 40 are overtime. That company may well have, unless it pays weekly, more than one workweek in its pay period. The overtime hours will need to be calculated by workweek, not by pay period.

Example 1: You have a pay period from Saturday, June 1, to Friday, June 14. This has two workweeks in the pay period because you have set your workweek from 0:00 a.m. on Saturday through 11:59 p.m. on Friday. You will have to look at the hours worked in each workweek. If employees worked no more than 40 hours in each week, then there is no overtime. But if a staff member worked 50 hours from June 1 through June 7 and 30 hours from June 8 to June 14, they are due 10 hours of overtime pay, even though they worked an average of 40 each of the two weeks in the pay period. Overtime is calculated on a per workweek basis, not a per pay period basis.

Example 2: Your pay period is semimonthly. Again, it started at 0:00 a.m. Saturday morning on the first of June and ended at 11:59 p.m. ...