Give a salaried employee a raise during a pay period

If your employee receives a raise in the middle of a pay period you will need to manually calculate the extra amount to add to the payroll to accommodate the salary increase.

Please consult a CPA with any questions about the method outlined below - several methods may be acceptable dependent on your specific situation.

  1. Figure out their old daily rate. Divide their old per pay period wages by the number of working business days within the pay period.
  2. Multiply their old daily rate by the number of working business days in the pay period they worked at this rate.
  3. Figure out their new daily rate. Divide their new per pay period wages by the number of working business days within the pay period.
  4. Multiply their new daily rate by the number of working business days in the pay period they worked at this rate.
  5. Add together both rates to get their correct salary.
  6. When you process payroll add in the difference between their old salary (auto populated) and their correct salary to account for the raise.

Example

My employee Aly makes $50,000 a year and is paid semi-monthly. She is going to get paid on October 15 for the period of October 1-15. She gets a big promotion and gets a raise to $60,000 a year effective October 10.

First, I divide 50,000 by 24 to get her old gross wages per pay period. Then, I divide $2083.33 by 11 (working business days within the pay period) to get her old daily rate of $189.39. Multiplied by the 5 days in the period she worked at this rate, I get $946.95.

Second, I divide 60,000 by 24 to get her new gross wages per pay period. Then, I divide $2500 by 11 (working business days within the pay period) to get her new daily rate of $227.27. Multiplied by the 6 days in the period she worked at this rate, I get $1363.62.

I add the two rates together to get her total salary, $2310.57

When I process payroll I see that her old total salary is $2083.33, so I calculate the difference between her old and new total salary, which is $227.24. I enter $227.54 as Other Earnings.

 

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