Introduction to Employees' Gross Pay

Introduction

Let's take an example of Zoho Company which manufactures beach toys of all shapes and sizes. These toyss are sold worldwide. We study Zoho Company in this section because of the variety of methods Zoho uses to pay its employees. Companies usually pay employees weekly, biweekly, semimonthly, or monthly. How often employers pay employees can affect how employees manage their money. Some employees prefer a weekly paycheck that spreads the inflow of money. Employees who have monthly bills may find the twice-a-month or monthly paycheck more convenient. All employees would like more money to manage. Let's assume you earn $50,000 per year. The following table shows what you would earn each pay period. Remember that 13 weeks equals one quarter. Four quarters or 52 weeks equals a year.

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We can estimate an annual salary by doubling the full-time hourly rate and then multiplying by 1,000.
Example: $10 an hour, $10 × 2 × 1,000 = $20,000.
You can estimate an hourly full-time rate by dividing an annual salary by 1,000 and then dividing by 2.

Example: $20,000 / 1,000 = $20; 20 / 2 = $10.
Now let us look at some pay schedule situations and examples of how Zoho Company calculates its payroll for employees of different pay status.

Hourly Rate of Pay and Calculation of Overtime

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The Fair Labor Standards Act sets minimum wage standards and overtime regulations for employees of companies covered by this federal law. The law provides that employees working for an hourly rate receive Time-and-a-half pay for hours worked in excess of their regular 40-hour week. Many managerial people, however, are exempt from the time-and-a-half pay for all hours in excess of a 40-hour week. Other workers may also be exempt. In our example, Zoho Company is calculating the weekly pay of Adam who works in its manufacturing division.
  1. For the first 40 hours Ramon works, Zoho calculates his gross pay (earnings before deductions) as follows: Gross Pay = Hours employee worked × Rate per hour;
  2. Hourly overtime pay rate = Regular hourly pay rate × 1.5
  3. Gross pay = Earnings for 40 hours + Earnings at time-and-a-half rate
Hourly Rate of Pay; Calculation of Overtime
Employee M T WTh F STotal
Adam 12 9.5 99 10.7511.2561.5


Let's assume that rate is $10.00 per hour.
  1. Number of overtime hours = 61.5 − 40 = 21.5 hours
  2. Overtime rate = $10 × 1.5 = $15
  3. Gross Pay = (40 hours × $10) + (21.5 hours × $15) = 400 + 322.5 = $722.5


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Date of last modification: March 11, 2019