Michael W. Kelly - PDF document

Michael W. Kelly Nisha S. Patel +1 650 843 3342 Payment for time worked and worked time is included in regular rate analysisPremium or penalty is NOT included Pitfalls of Percentage MethodYou still need to apply it against Total Pay during a defined period Unexpected contingencies make the project take much longer so OT increases and Total Pay inflatesScheming employees try to pad OT by working more slowlyOf course, that incentive always exists is no need to recalculate past OT payments.If the Company announced the bonus for completing the project would equal 4.5% of Total Pay for the 4-week project in first example, the result would be an $85.50 bonus.$1,900 x .045% = $85.50This works because you are increasing the regular pay ($1,600) If bonus is for completing project and is paid in first pay check AFTER the project is completed, the bonus is not being allocated to the actual hours during which it Defining the bonus period is important.Bonus periods often DO NOT align with pay periodsContrast quarterly or monthly incentives with bi-weekly payrolls so the calendar periods DO NOT align with the bonus period. recalculate the regular rateand also certain “rump” days at the beginning or end of contiguous pay periods. Once the bonus is paid for an incentive earned based on past Using our Bonus example, if the employer did not know the $75 bonus was earned until after the close of the pay periods, it would have to go back and recalculate the regular rate to add in the additional $12.40.This additional time in past pay periods needs to be clearly recorded on the pay Where the regular rate varies by week, this may require many new lines or an Overtime Premium = ½ Regular Rate x OT Hours3 hrs x $5.00 = $15 OT premiumRegular Pay = $400Total is $490 employee worked 1 hour but was guaranteed 2 hours of call back Regular Rate 40 hrsx $10/hr= $400 [Regular Hours Worked]3 hrsx $10/hr= $30 [OT Call Back Hours Worked]3 hrsx $15/hr= $45 [Call Back for Unworked] NOT INCLUDEDRegular Rate = $430/43 Hours = $10 hr. Special Regular Rate RulesGifts if not dependent on hours worked, efficiency, etc.Payments not for hours worked –vacation, holidays, illness. Uncontrolled Standby Pay IS included despite being pay for not special consideration Bonus ExampleHourly rate --$10.00Hours Worked –45 hours per week for 4 weeksRegular Pay = $10.00 x 40 hours x 4 weeks = $1,600Overtime Pay = $15.00 x 5 hours x 4 weeks = $300Total Pay = $1,900Add a $75 bonus announced if employees complete project on Regular Rate = ($1,800 + $75)/ 180 hours = $10.42Overtime Pay = $15.62 x 20 hrs = $312.40The $75 bonus actually yields an extra $87.40 in compensation Bonuses paid as gifts for past service and not dependent on hours worked, production or efficiency are not included. Regular Rate of PayRegular Rate = Total Pay/Total Hours WorkedOften, Regular Rate = Hourly RateBonuses and other NON-DINon-exempt commiPayments other than cash Paystub Basics (Labor Code 226)No paystub suppliedCannot promptly and easily determine from wage statement alone information regarding pay including gross, net or applicable hourly rates Paystub Basics (Labor Code 226)Employees suffering injury from a “knowing and intentional failure to comply” are entitled to the greater of $50 for the first infraction and $100 for each subsequent pay periodDamages capped at $4,000 PLUS costs and reasonable attorneys’ fees. Paystub Basics (Labor Code 226)All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate.For temp agencies, this must Records must be maintained at worksite or central location in California for 3 Current and former employees have right to inspect or copy records upon You may charge employees the actual cost of reproduction.Comply within 21 days of request. Paystub Basics (Labor Code 226)Gross Wages EarnedTotal Hours Worked (except exempt salaried)Piece-rate units earned and any applicable piece rateDeductions made at EMPLOYEE’s orders may be aggregatedNet Wages earnedInclusive dates of the period for which paidEmployee name and last four digits of SSNName and address of the employer Paystub Basics (Labor Code 226)Itemized Statement issued at time of payment Detachable part of the checkSeparately when wages paid by personal check Avoiding Payroll Miscalculations and Michael W. KellyNisha S. Patel