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Jan25

Hourly Salary in Advance

Hello, I was wondering how I can pay my hourly payroll in advance before the month end if we don’t know if the employee will work the expected hours. I want to allocate my payroll cost to the month that has been worked. One of the things we want to avoid is adjusting salaries for the next month because it creates double work for HR. Thank you

Unfortunately, any time you do payroll in advance you run the risk of needing to make adjustments to accurately pay employees. The best you can do is use the employees’ regularly scheduled hours.

You may consider paying your hourly/non-exempt employees on a salary basis. Though doing so is not usually cost effective for employers, it will alleviate some administrative burden.

The federal Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.

Under the FLSA, employees are either non-exempt or exempt.

Non-exempt employees must be paid for all hours worked and are subject to overtime and minimum wage requirements prescribed by the FLSA. Conversely, exempt employees receive a fixed predetermined salary and are excluded from overtime pay provisions.

Salary and hourly paid are compensation terms. Though uncommon, a non-exempt employee can be paid a salary each workweek.

So, for example, an employee regularly scheduled to work 40 hours per week at $20/hour would receive $800 as a salary per week. Paying non-exempt employees on a salary basis is really only advantageous for the employer if the employee rarely exceeds his regularly scheduled hours.

Keep in mind a non-exempt salaried employee must still be paid for each and every hour worked and receive overtime pay for hours worked over 40 in a workweek.

This entry was posted on Monday, January 25th, 2016 at 12:25 pm and is filed under
Compensation.
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