Prorate an employee's salary

If your employee receives a raise in the middle of a pay period, you must 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 depending on your specific situation.

In the example calculation below, Aly is making $50,000 a year when she gets a raise to $55,000 a year. She is paid every other week on Friday. Her raise is effective in the middle of the pay period, on a non-payday Friday.

Divide their annual salary by the number of pay periods in a year.

Aly makes $50,000 a year and is paid every other week.

$50,000/26 = $1,923.08

Divide the amount they are paid in a period by the number of days in a period to calculate their old daily rate.

Aly makes $1923.08 for 14 days worked.

$1,923.08/14 = $137.36

Repeat the steps above to find your employee’s new daily rate.

Aly now makes $55,000 a year. Her new daily rate is $151.10.

$55,000/26 = $2,115.38.

$2115.38/14 = $151.10

Add the number of days at the old rate with the number of days at the new rate to get the total salary for the pay period.

Aly worked 7 days at $137.36 a day. She worked 7 days at $151.10 a day. Her total salary for the pay period is $2,019.22.

$137.36 x 7 = $961.52

$151.10 x 7 = $1,057.70

$961.52 + $1,057.70 = $2,019.22

 

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