Payroll Wages and Salaries
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Can overtime hours accumulated in one workweek be shifted to another workweek?
No. Each workweek stands alone and is a separate unit for computing OT pay.
How much is overtime pay?
By FLSA law, OT is 1.5 times EEs regular hourly rate of pay. IF state is higher, then state applies.
Can ERs require EEs to work overtime?
Yes, ERs can require EEs covered by FLSA to work OT. IF they refuse, they can be fired. There is no limit on OT that may be required, except by some states.
What about overtime for EEs who work in pay periods of 2 weeks or longer?
If EE works 44 hours in week 1, and 34 hours in week 2, then he gets 40 + 4*1.5 + 34 hours of pay = 40 + 6 + 34 = 80 hours.
Exceptions to overtime hours and pay provisions are:
Hospital workers can be paid in 14 day period. OT is 1.5 X reg hourly rate for hours worked in excess of 8 hours in a day, or in excess of 80 hours in a 14 day period.
When are EEs in retail and service industries exempt from OT provisions?
EEs in retail and service are exempt from OT provisions as long as regular weekly pay rate including commissions is at least 1.5 X fed min wage ($10.88) and more than 1/2 of pay over a month is from commissions. OT exemption is lost for any week in which pay < $10.88 per hour.
What is included in regular rate of pay?
- Remuneration for employment paid to EE:
- Commission payments,
- Earned bonuses (non-discretionary, based on hours worked, units produced, work quality),
- Severance pay,
- On-call pay,
- Shift or weekend differentials.
What is not included in regular rate of pay?
- Not included in regular pay rate are:
- Gifts made as reward for service,
- Payments for profit-sharing or savings plan,
- Payments for periods when no work is performed - vacations, holidays, sick days, jury duty.
Independent Contractor test:
- 1) is free of direction & control,
- 2) performs services outside usual course of business,
- 3) customarily engages in independent occupation.
IRS common law rules for EE or IC:
- 1) Behavioral: Does company control what and how a worker does his job?
- 2) Financial: Are business aspects of job controlled by payer - desks, tools, etc.
- 3) Type of reln: Are there benefits - pension, insurance, vacation pay, etc?
Domestics must be paid min wage if:
- they in one or more homes for total of 8 hours per week,
- they earn at least $1,000 from an ER in a calendar year.
When are domestics exempt from overtime pay?
IF domestics do not live in household, they must be paid OT. Live-in domestics do not have to be paid OT.
Partnerships - are partners EEs?
Generally no, partners are not EEs.
What are the two bases of coverage provide for in FLSA?
- 1) Enterprise - all EEs if at least 2 EEs engage in interstate commerce or produce goods for interstate commerce AND business has gross sales ≥ $500,000.
- 2) Individual - FLSA covers a worker if he engages in interstate commerce or produces goods for IC. Even though business does not meet enterprise coverage test, must pay FLSA wages to EEs eligible for individual coverage.
What is a "living wage"?
Attempt to keep pace with needs of working poor by requiring ERs to pay higher wage, health ins coverage.
People earning tips must be paid at least minimum wage: T or F?
- If a waiter earns $100 per week (100/40 = $2.50ph) and $100 in tips, then the ER must pay him extra.
- $290 = $7.25 x 40
- $100 = wages
- $100 = tips
- $ 90 = extra weekly pay from ER.
FLSA definition of workweek:
- 7 consecutive 24-hour periods.
- EE workweek = contract nr of hours to be worked regularly during that period.
White-collar workers are exempt from FLSA reqs such as min wage, equal pay, and OT pay iff:
- EE paid on salary basis,
- paid ≥ $455 per week,
- amount cannot be reduced because of fluctuations in quantity or quality of work.
Child Labor Restrictions:
FLSA prohibits a business from interstate shipment of goods or services if it employs a child unlawfully.
Non-farm employment of people under age 18:
- Basic min age is 16, except for hazardous jobs.
- Ages 14 - 16 is possible in non-hazardous jobs:
- All work must be outside school hours,
- Max 3 hour day, 18 hr week if school in session,
- All work must be between 7AM and 7PM.
Areas NOT covered by FLSA:
- Pay extra for work on Sat, Sun, or holidays,
- Pay for holidays, vacations, severance,
- Limit the nr of hours or work for > 16,
- Give holidays off,
- Grant vacation time,
- Grant sick leave.
- Reg hrs worked X reg hourly rate.
- OT is 1.5 x reg.
IF standard work week is less than 40 hours, when must ER pay for overtime?
- ER must pay OT only for hours worked > 40 hours per week.
- So if standard week is 35 hours, and you work 39, then get paid regular rate ∀ 39 hours.
- If then work 43 hours, then you get 3 hours OT.
Piece Rate System calculation of hourly rate:
- 13,000 items in 40 hours. Rate is 0.04 per item, and 0.02 bonus > 12,000 per week.
- 13,000*0.04 = $520.00
- 1,000*0.02 = $20.00
- Total = $540.00 this week.
- So $540/40 = = $13.50 per hr.
What is a commission?
- A commission is a stated %age of revenue paid to an EE. Can have fixed salary per year, plus bonus in excess of a stated amount. If get $35,000 salary + 6% commission on sales > $800,000, and sell $1,030,000, then 230,000*0.06 = $13,800.
- Total salary = 35,000 + 13,800 = 48,800.
Commissions are considered payment for hours worked and must be included in determining the regular hourly rate. T or F?
- Regardless of whether commission is sole source or paid in addition to salary or hourly rate.
Commissions are treated as straight time pay. T or F?
- To calculate OT, weekly commission is divided by total hours worked. This is EE regular pay rate. OT is 1.5 * reg for hours > 40.
OT for Piece Rate:
- Paul produced 3,073 pieces in 44 hour week, and is paid $0.1475 per unit.
- Reg weekly = 3,073 * $0.1475 = $453.27
- Reg hourly = $453.27 ÷ 44 = $10.30 per hour.
- OT rate = 10.30 * 0.5 = $5.15 per hour.
- 4 hours OT = 4 * $5.15 = $20.60.
- Reg + OT = $473.87 PW & OT.
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