Salaried Employee Pay for 53 week pay periods

SLPaulson · January 2004

We pay our employees on a weekly basis (I know, our Payroll lady screams every week.) That being said, this year, 2004, is a 53 Friday year. Payroll just caught this and is proposing to adjust the exempt employee's salary based on 53 weeks and not 52 weeks. When we hire an exempt employee, their job offer letter states: "Will be paid on a weekly basis equivalent to an annual salary of $50,000." I know the exempt people are going to scream, when they see their checks are less. (I'm already through with my screaming.) Has anyone encountered this issue and if so what did you do?

marc · January 2004

This topic has arisen several times recently so know that you are not alone. Most of the other threads deal with a 27 pay period year, but a bit of research on this topic will provide good yield. That said, many people are treating payroll as a cash basis proposition. I bet your accounting department can give some insight about the difference between cash and accrual accounting. Even though you have 53 Fridays, there is still only one more business day because of the leap year. The first Friday payday is likely for the last week of 2003.

Rockie · January 2004

We went through this right before the end of the year. What we did instead of reducing salaried individual's pay per bi-weekly, we went to twice a month pay for salaried individuals - 1st and 15th of the month. The hourly folks remained the same - paid on a bi-weekly schedule.

I can tell you right now this was a flat out nightmare at the end of the year and also with putting in a new payroll system on top of that. It was not worth whatever the CFO had determined that we would be "saving" by doing this.

Don D · January 2004

their job offer letter states: "Will
>be paid on a weekly basis equivalent to an
>annual salary of $50,000."

But, back to your offer letter. The way your letter is written, the exempt employee can only lay claim to the product of $50k divided by the number of weeks in the year (whether many or few. HA!)

It is also true, as Marc suggests, that nobody is gaining or losing. If you pay for work weeks already completed, then you eventually pay nothing more than for all work done, regardless of number of weeks in a year.

CJ_2 · January 2004

I agree with Don. Our Controller just realized that fact AFTER she paid the first payroll. Since we only have 5 exempt employees, our salary was recalculated and adjusted accordingly to work out to our annual salary agreement. The hourly ee's notice little change, except for any liabilities they have. Of course, their AFLAC benefits were adjusted, they are actually paying less, so it all works out. I didn't like it either, but the change only amounted to about $50 per pay period. Taxes sometimes will offset some of it, depending on the range the salary falls in. Just do what works for you and please do a memo of explanation to go with the paycheck. Most ee's will whine a bit, but hey - life goes on.

hrbanker · January 2004

My husband's school reduced pay to make up for the 'catch-up' week. They are all on contract and no one complained.

We have 27 pays in 2004 and will pay the extra. We will put a footnote in the annual report to explain why the CEO's pay exceeded his salary.

We use accrual accounting, so in 2003 we accrued for the 13 workdays in that year which were paid in 2004.

Use whatever works best for your accounting system, but let the employees know in advance of any changes in pay.

SLPaulson · January 2004

Thanks everyone for your quick response. Letters will be attached to their checks this Friday.

Salaried Employee Pay for 53 week pay periods

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