Adjust a Salaried Employee's Wages
Can I prorate a new hire or terminated employee's salary?
Purpose: This guide will show you how to prorate an employee's salary right within your payroll run. It will also teach you about salary proration when changes are made mid-pay period.
Please be aware that the proration tool only works within standard payrolls.
Please be aware that this tool does not prorate wages for employees who take unpaid time off during the pay period or whose compensation changes in the middle of the pay period. It also does not account for Holidays in an employee's work schedule.
Prorating an Employee's Salary
If an employee is hired or terminated within the pay period, you will see a New Hire or Terminated banner by their name. If the employee is paid a salary, you will also see a banner at the top of the page letting you know that their wages need to be prorated.
The system indicates, "You've got wages that might need to be prorated! [Number] employees didn't work the full pay period." You are prompted to "Review the calculations to prorate their wages.
You can also access the Prorate Wages modal for the individual employee in the following places:
- On the Edit page, when hovering on the employee row and clicking the “Prorated Wages” icon next to the amount of wages.
- On the employee's Payment Details page in the Wages section,
After clicking Prorate Wages, you can click the edit icon next to an employee or select Review Individually to adjust wages if necessary.
If employees work a regular schedule of Monday-Friday for 8 hours per day (40-hour work week), the system will suggest a prorated amount for you. Clicking the edit icon or Review Individually will open the Edit Proration modal. From here, you can also choose to calculate the wages yourself by entering hours and wages (both required), or you can choose not to prorate and pay the employee as if they worked the entire pay period.
Choosing to prorate wages, whether you use the suggested amount or calculate wages yourself, will also adjust the employee's regular hours.
Once the wages are to your satisfaction for each employee, click Review to return to the previous page. Finally, click Submit Wages to return to your payroll run.
Mid-Pay Period Pay Changes for Salary Employees
BambooHR automates the process of calculating Salary employees' wages when there is a mid-pay period pay change. It will try to calculate the prorated wage under the following conditions:
- Employee's Pay Type is Salary at the start of the Pay Period.
- Employee's hour per week is set to 40.
- Employee's Salary Pay Rate changes during the pay period.
- Pay Rate change happens in consecutive dates with no gaps in between.
- Employee's Salary Pay Rate change was an Update or New Entry and not a Correction to an existing entry.
If all criteria are met, but there were also other compensation field changes that could impact pay for the pay period, the system cannot calculate. These situations include:
- If the new Start Date is outside of the Pay Period
- If Pay Schedule is changed
- If Pay Type is changed
- If Hours Per Week is changed
- If Pay Per is changed
- Overtime Status is changed (e.g., Exempt or Non-Exempt).
The wage calculation is pay schedule frequency agnostic and assumes a Monday-Friday 40-hour work week, similar to Salary Proration. The calculation involves the "Previous Salary for x days + New Salary for x days". The formula used is: ([Starting Annual Salary] / [Annual Hours Worked]) * [Hours Per Day Worked] * [Pay Period Days Worked at that Salary] + ([New Annual Salary] / [Annual Hours Worked]) * [Hours Per Day Worked] * [Pay Period Days Worked at the New Salary]. For this calculation, Annual Hours Worked is always assumed to be 2080 hours per year (40 * 52), and Hours Per Day Worked is 8. Pay Period Days Worked refers to the number of working days (Monday - Friday). If the pay change does not meet the proration criteria, the system cannot calculate.
Payment Details Page
If a Salary employee needs adjusted wages, the Prorate Wages banner will appear during your payroll run. A Pay Change flag also shows below the employee's name, similar to New Hire or Terminated.
1. If there are multiple events affecting an employee's wages for the pay period, the system will still attempt to prorate their wages and you will see "Multiple Factors" under their prorated wage.
2. The Salary Adjustments modal shows a breakout of salary wages for both pay rates (e.g., "Jun 1-6: $1000", "Jun 7-15: $1,569.23").
3. If an employee's wage is updated mid-pay period, but does not meet all of the criteria above, they will still show in the Salary Adjustments table, but their wages will list as $0.00 with the "Needs review" warning underneath.
4. If any employee's prorated wages could not be automatically calculated, you musts review them individually before submitting the wages.
When reviewing individually, you will see the suggested wage and how the system calculated it. You can also choose to pay them their original rate, the new rate, or calculate it yourself.
If the employee's salary changed during the pay period but the system could not calculate their pay, you will see the "Heads Up!" warning message when reviewing individually. In this case, you can choose to forgo proration or to prorate the wages yourself.
For employees with more than one salary change event during the pay period, the system reminds you in a few different places.
For payroll review and paystubs, the hours worked are combined, and only the total wages are shown.
If there is more than one applicable proration event during the pay period for an employee (e.g., New Hire + Pay Change, Terminated + Pay Change, New Hire + Terminated + Pay Change), you will see multiple flags. Before reviewing individually, you will see a prorated wage and "Multiple Factors."
When reviewing their wages, each of the changes affecting their wages are listed at the top. You'll also see how the system calculated the proration.
If the employees do not work a typical 40-hour work week, our system will isolate the employees but ask you to calculate their prorated wages. For mid-pay period pay changes, this also applies if the salary employee does not work a typical schedule (Monday - Friday at 40 hours per week). In such cases, their wages will show as "$0.00 Needs review" as suggested wages cannot be calculated, and you must enter their wages manually.
After clicking the Prorate Wages button, a modal will open to show you which employees need attention and you'll be able to enter their hours worked and appropriate wages. The system will display a "Heads up!" warning message indicating that suggested wages cannot be calculated, and you'll need to review their wages individually. For these employees, the Prorated Wages section will show $0.00 and Needs review.
