How to Calculate the Final Rate of Pay for Exempt Employees in California
As a California employer, you must pay final wages on time or you may be subject to penalties. You must also include accrued vacation pay in an employee's final wage payment. When you terminate an employee, you must pay all final wages upon termination. You must pay final wages within 72 hours of an employee's quitting, or at the time he quits if he has given at least 72 hours notice. These laws apply to both exempt and non-exempt employees. Because exempt employees are generally paid a salary rather than an hourly wage, it is important to know how to properly calculate an exempt employee's rate of pay so you can pay him for his accrued vacation hours, as well as a partial pay period if applicable.
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1.
Calculate the final pay rate for an exempt employee who is normally paid weekly by dividing his regular weekly pay rate by the number of hours he is expected to work, which will typically be 40 for a full-time employee. This gives you his hourly rate, which you can use to calculate his accrued vacation pay and the pay for his final work period.
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2.
Determine the pay rate of an exempt employee who is paid biweekly by dividing his regular salary by the number he is expected to work, which is usually 80 for a full-time employee.
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3.
Determine the final pay rate for an exempt employee who receives a semi-monthly salary by multiplying his regular salary by 24 to determine his annual salary, and dividing that number by 52 to obtain his weekly salary. Divide that amount by his regular number of weekly hours to determine his hourly rate.
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4.
Find a monthly-paid exempt employee's final hourly pay rate by multiplying his salary by 12, dividing by 52 and dividing by his regular number of weekly hours.
References
Tips
- The federal Fair Labor Standards Act specifies that "an employer is not required to pay the full salary" to an exempt employee "in the initial or terminal week of employment."
Warnings
- Always verify that you are following the most current California labor laws regarding payment of final wages.
Writer Bio
Diane Scott started writing professionally in 2009 and has had articles published at Type-A Parent and other websites. She has extensive business and accounting experience. Scott holds a Bachelor of Science in psychology from Brigham Young University.