Computing Salaries Assignment - Assignment Attached Employer Quarterly Payroll Tax Return Assignment .docx & Form 941 - Quarterly Payroll Tax Form.pdf - attached (these go together)

ACCT137 Lecture 2 – Computing Wages and Salaries

Also known as the Federal Wage and Hour Law is very important to all business who have employees. This act contains standards and provisions about:

• minimum wages

• equal pay for equal work regardless of sex

• overtime pay

• record keeping

• child labor

The Wage and Hour Division of the U.S. Department of Labor (DOL) administers the act.

For more specifics and details on the act, please go to:

https://www.thebalance.com/the-fair-labor-standards-act-us-524845

Time Rate-

When calculating the wages of hourly paid employees, multiply the total regular hours worked by the regular hours rate. If they work overtime, multiply the total overtime hours by the overtime rate.

Example: Joe is paid $16.50 an hour and works 48 hours this week. The overtime rate is 1 ½ times the regular hourly rate. His gross pay is calculated as:

Regular hours - 40 Hrs. * $16.50 = $660.00

Overtime Hours – 8 Hrs. *$24.75 ($16.5 * 1.5) = $198.00

Gross pay = $858.00

Another way to calculate this that is just as correct is:

Regular hours - 48 Hrs. * $16.50 = $792.00

Overtime Hours – 8 Hrs. *$8.25 ($16.5 * .5) = $ 66.00

Gross pay = $858.00

Salaried nonexempt employees- These are employees who are paid a salary rate but are also subject to the overtime laws of the FLSA. This means if they work more than 40 hours a week then they are paid overtime for the time over 40 hours worked. This means you must convert their salary to an hourly rate for the overtime hours.

Convert weekly pay rates to hourly rates – This is necessary if a non-exempt employee works overtime. To do this calculation, let’s assume Joe is paid $412 a week and he works 48 hours this week. His hourly rate is $412 / 40 hours = $10.30 per hour. His overtime rate is $10.30 * 1.5 = $15.45 per overtime hour.

Convert biweekly rates to hourly rates - To do this, divide the biweekly rate by 2 to get the weekly rate. The divide the weekly rate by the number of regular hours as we did above.

Example. Joe is paid $980 biweekly. The regular hours per week is 40 hours.

Weekly rate = $980/2 = $490.00

Hourly rate = $ 490/40 = $ 12.25

Overtime rate = $12.25 * 1.5 = $ 18.38

Convert monthly rates to hourly rates – To do this, you must first convert the monthly rate to an annual rate, divide by 52 to get the weekly rate and then divide that by the weekly regular hours which we will use 40 hours.

Example - Joe is paid $5,200 per month.

Annual rate = $5,200 * 12 months = $62,400

Weekly Rate = $62,400/52 weeks = $ 1,200

Hourly rate = $1,200/40 hours = $ 30

Overtime rate = $30 * 1.5 = $ 45

Convert semimonthly rates to hourly rates – This is done in the same manner as monthly but you multiply period earnings by 24 instead of by 12 to get the annual rate.

Example – Joe is paid $1,725 semimonthly.

Annual rate = $1,725 * 24 periods = $28,200

Weekly Rate = $28,200/52 weeks = $ 542.31

Hourly rate = $542.31/40 hours = $ 13.56

Overtime rate = $13.56 * 1.5 = $ 20.34

Piece Rate - Under this method employees are paid based on their production (output). The more they produce, the more they are paid. Under this method, the employee’s rate must equal at least the statutory minimum wage.

Video – Overtime Pay

https://www.youtube.com/watch?v=mtNgCwblgLo

Partners are not generally employees of a partnership. Their income flows through directly to their personal taxes. Any salary allowances a partner receives is not generally subject to payroll taxes.