Chicago Police Retro Check Calculator

Chicago police retro check calculator
retroactive pay law

If the raise took effect with four days to go in the pay period, that means four days of pay (using eight hours per day based on a hour workweek) need to be accounted for in the retro adjustment.

 

  • New rate of $25 per hour – Old rate of $22 per hour = $3 per hour difference
  • 4 days X Chicago police retro check calculator hours per day = 32 hours of payment at the old rate
  • $3 per hour X 32 hours = $96 due in retroactive pay

 

In this example, the employee would be owed $96 in gross retro pay.

Salaried Employee

 

Though the process of calculating retroactive pay for salaried employees is similar, there is an extra step.

Police would get another % in raises going forward into

The retroactive pay would cost about $ million, according to the city. Find the employee's new hourly rate and subtract the original rate

Include the new hourly rate to make a retroactive payment to an employee.

Example:The sales associate now earns $12 per hour after a promotion.

Conversion calculators used to determine the estimated street value of narcotics for accurate. Subtract the total

Subtract the amount the employee makes per paycheck from their newer annual salary by the amount from their older annual salary.

Example:If the project manager subtracts the $3, made from their pay raise by $3, they make $50 more per paycheck.

6. If the employee is semimonthly, divide the salary by If they're biweekly, divide it by

Example:If the project manager made $80, that's $3, per paycheck.

4.

Lightfoot set aside about $ million in this year’s budget to cover part of the police back pay. From calculating and executing retro pay to providing a new employee orientation checklist to simplify your onboarding process, contact your local payroll pros at Payroll Vault. Most commonly, it is linked to late performance appraisals, in which the employee received a pay increase that took effect in a prior pay period.

Employees who are anticipating retro pay, or those who already received it, may have questions about the calculation.

Lightfoot last month pledged the increase the Chicago police budget despite opposition from progressive aldermen who would rather that money When is the best time to play slot machines online toward other city services.

Tribune’s Jeremy Gorner contributed.

© Chicago Tribune.

The latest chapter of negotiations saw division between union and city officials over police discipline as the FOP continues to oppose a federal consent decree to overhaul the police force.

The new contract also comes after another violent summer in Chicago concludes with soaring homicides, amplifying the pressure on Lightfoot to address crime.

Additionally, an employee can earn back pay if they transition from a role that paid an hourly wage to a salaried position.

A union employee can earn back pay from a company if stipulations in the contract warrant a pay raise. Check out our free calculator for help. The raise took effect at the start of the month but will not be reflected in paychecks until the second pay period of the month, meaning a full pay period should be accounted for in retro pay.

 

  • Old Annual Salary of $60,/24 Pay Periods = Old Rate of $2, per pay period
  • New Annual Salary of $65,/24 Pay Periods = New Rate of $2, per pay period
  • New Rate of $2, – Old Rate of $2, = Difference of $ per pay period
  • $ per pay period X 1 Pay Period = $ is due in retroactive pay

 

Only one pay period needed to be remedied in this example, so the employee would be owed $ in gross retro pay.

No One-Size-Fits-All Approach

 

Of course, these examples are purely hypothetical and simplified to explain the process.

In some cases, the labor department might oversee the back pay process to ensure employees received withheld payments.

Related:6 Tips For Your Next Salary Negotiation

How is back pay determined?

A company can only withhold wages if the employee agrees to it, such as withholding pay for taxes.

OFFICER]. (Retro pay for overtime hours is based on the difference in the old and new overtime rates.)

Calculating retroactive pay for salaried employees

You&#;ll need to know the difference in the employee&#;s old and new annual salaries plus the effective date for the new annual salary.

Example: Mary, who is paid semimonthly, on the 15th and last day of every month, received a 3 percent salary increase, going from $70, per year to $72, per year.

Back pay means paying an employee their owed wages that were not ever paid. Access your Chicago Police Department e-mail remotely.

retro pay vs back pay

$, ABAD JR, VICENTE M. Help Is the employee owed back pay for a period of time during which the employee was erroneously separated due to an unjustified or unwarranted personnel. If the project manager earned a 15% raise, their current salary is $81, per year.

2. That would Easy bets to win handled in a separate deal, he said.

Tuesday’s vote capped off more than two years of heated negotiations that were often overshadowed by public feuding between Lightfoot and FOP President John Catanzara.

Find the number of hours worked after the raise took effect

Find out how many hours an employee worked once they received the raise.

Example:The sales associate works full time and earned their first payment after the previous biweekly payroll period started. [PROBATIONARY POLICE. 

3. There are a variety of reasons for retro adjustments to be made, including bonuses that need to be paid out, and several correlating methods of calculating the pay that is due.

There are so many moving pieces that are necessary in paying a staff on time and in full.

 

What happens, though, when that payment is incorrect?

 

This results in a common process called retroactive pay (or “retro pay”). It is often paid as a separate payment or added to the next paycheck once the discrepancy is discovered.

 

This is different from back pay, which sounds similar but is another process that is often discussed.

Visit chicagotribune.com. Divide the employee's newer annual salary by the number of pay periods

Divide the new salary by the number of pay periods.

Example:If the project manager makes Chicago police retro check calculator, after their 15% pay increase, they earn $3, after dividing their new annual salary by

5.

They earn a raise beginning March 1 and they're anticipating the retroactive pay on their April 15 paycheck. The new rate took effect at the start of the previous biweekly pay period in which he worked, and was paid for, 80 hours.

Calculation:

$13/hour &#; $12/hour = $1 per hour difference in pay

80 hours x $1/hour = $80 gross retro pay owed to John

Also, factor in any overtime that the employee worked during the pay period(s) for which retro pay is due.

List of all current City of Chicago employees with full names, departments, POLICE.

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Are they semimonthly, such as the 15th and 30th of each month, or simply every two weeks?

 

Semimonthly would mean dividing the annual salary by 24 (12 months times two), while biweekly pay would mean dividing the annual salary by 26 (52 weeks in a year divided by two).

 

Let’s assume for this example: a salaried employee reaches a work anniversary that is accompanied by an agreed-upon raise, bringing their annual salary from $60, to $65, This company pays on a semimonthly basis, meaning there are 24 pay periods in each year.

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Retro Pay: How to Easily Calculate Retroactive PayPhoneSign In

How to Calculate Back Pay

By Indeed Editorial Team

Updated February 22, Published March 12,

Updated February 22,

Published March 12,

Back pay is an important calculation to make when a company needs to compensate an employee.

Here’s how to make a retro adjustment.

 

It’s easy to think of payroll as a simple task — you pay your employees for the work they perform and the time they put in.

 

But the payroll process gets complex quickly, enough to require a payroll professional to navigate the constantly changing legislation and requirements on a regular basis. Retroactive to and ending inthe proposed deal must be ratified by police officers and the Chicago City Council before it takes.

Chicago police retro check calculator

Biweekly Pay Schedules: Understanding Key Differences

How to calculate retroactive pay for hourly employees

Here are the steps to calculate retroactive pay for hourly employees:

1. Retroactive pay could rectify errors such as a payroll mistake, an unpaid raise to an employee or a miscalculation of an employee's wages compared to previous payments they've received.

Related:Semimonthly vs.

Chicago police retro check calculator

CPD NOTE: Step 11 affects only those members attaining 30 years of service prior to 1 January Learning about back pay and retroactive pay will help you better understand the differences between the two and how to calculate them. Employers give back pay to compensate for payments they didn't make for past work. Identify the employee's original annual salary and the new salary

Determine the salary the employee made last year and the new salary.

Example:A full-time project manager's salary was $80, last year.

Retro Pay: How to Easily Calculate Retroactive Pay · Hourly Employee · First, you calculate the difference in hourly rate, which in this example. They have two semimonthly pay periods since the April 15 check has the new rate on it.

3.

how to calculate retroactive pay increase

Multiply the difference by the number of pay periods

Multiply the difference between annual salaries and the number of retroactive pay periods Roshtein slots fake see how much the employee needs to receive.

Example:If the project manager multiplies $50 by the two pay periods between March 1 and April 1, they earn $ in retroactive pay.

This calculator estimates retirement annuity benefits from the Policemen's Annuity and Benefit Fund of the City of Chicago.

CPD NOTE: Step 11 affects only those members attaining 30 years of service prior to 1 January New Chicago police officers at a graduation ceremony at Navy Pier in The retroactive pay raise for firefighters and paramedics cost. This can occur if an employee receives a promotion or a pay raise.

Example: A sales associate made $10 per hour before earning a raise.

2. An employee may request back pay if they believe a company didn't pay them for the wages they earned.

Here, you need to factor in the pay periods. That way, you can focus on the business operations that truly fill your passion.

 

 

 

Originally posted on PayrollVault.com. 

Interesting post? This total accounts for 80 hours of retroactive pay.

4. Retro pay is made to an employee to make up the difference of what was paid and what should've been.

There are also tax implications that need to be factored into these payments, as wages are still subject to any necessary payroll taxes.

 

Navigating the retro pay process represents another complexity that leads many business owners to seek outsourced payroll and workforce management expertise. Calculating retroactive pay for hourly employees.

Learn how to calculate retroactive pay with our guide.

how to calculate retro pay for hourly employees

Divide the employee's old annual salary by the number of pay periods

Divide an employee's older annual salary by the number of pay periods. That is less common than retro pay, which is simply fixing a difference between what was paid and what was supposed to be paid.

Image

How to Calculate Retro Pay

 

As with any payroll process, calculations depend on several factors, though these are often fairly simple to determine.

 

Most importantly, you will need to verify the period of time there was a payment discrepancy along with the type of pay (hourly or salaried).

Therefore, you should know how to figure retro pay for your hourly and salaried employees. The employer and employee must agree to the amount before processing back pay.

how to ask for retroactive pay

Usually, a business will allocate unpaid wages to the next paycheck.

Here are a few examples of when a company may owe back pay to an employee:

What is the difference between back pay and retroactive pay?

Back pay is the wages that a company still needs to pay to the employee. If they subtract the original hourly rate from the new one, the employee received a $2 pay increase.

OFFICER]. Retroactive pay is the difference between what a business should pay the employee versus what they earned. Payroll mistakes are rarely intentional, but mistakes can still happen throughout the payroll process. Note the number of pay periods

Find out when the employee's new salary increase goes into effect and how often they get paid.

Example:The project manager gets paid semimonthly.

Chicago police retro check calculator How to Calculate & Process Retroactive Pay (+ Free Calculator)

F. Salary. Keep in mind, there are several legal guidelines dictating pay periods that could affect your calculations in certain situations.

 

Let’s work out a couple of examples — one for an hourly employee and one for a salaried employee.

Hourly Employee

 

Let’s say your hourly employee has a good performance review and earns a pay raise from $22 per hour to $25 per hour.

[PROBATIONARY POLICE. Therefore, you should know how to figure retro pay for your hourly and salaried employees.

Calculating retroactive pay for hourly employees

You&#;ll need to know the new hourly rate, the old hourly rate, the effective date for the new hourly rate and the number of hours paid at the old rate. Multiply the number of hours worked by the difference in the hourly pay rate

Multiply the 80 hours earned by the $2 difference to get the retroactive pay total.

Example:The sales associate receives a sum of $ of retroactive pay before taxes.

How to calculate retroactive pay for salaried employees

Here are steps to calculate retroactive pay for salaried employees:

1.

Distributed by Tribune Content Agency, LLC.

Retro Pay: How to Easily Calculate Retroactive Pay

All,#payrollcheckup,RetroactivePay,PayrollVaultBestPractices

Retro Pay: How to Easily Calculate Retroactive Pay

Retro Pay:
How to Easily Calculate Retroactive Pay

Retroactive pay, or retro pay, is the money you owe an employee for work performed during a previous pay period.

The raise takes effect on the first of the month, which happens to fall four days before the Chicago police retro check calculator of a pay period.

First, you calculate the difference in hourly rate, which in this example is three dollars per hour. It’s entirely possible that they may run into a scenario where retroactive pay is necessary.

What Is Retro Pay?

 

Retroactive pay makes up for the difference between the amount an employee was paid and the amount they were owed during that time.

Her administration plans to refinance existing debt to pay for the rest of it.

Among police accountability measures are the elimination of a requirement that police disciplinary records older than five years be destroyed; an end to allowing officers to change their testimony during disciplinary investigations after viewing video evidence; and recognition that officers who report potential misconduct are “acting in the highest traditions of public service.”

The agreement, which has been ratified by the police union, also addresses how Favorite slot machines deal with a new state law that allows anonymous complaints against cops and no longer requires complainants to sign affidavits attesting to the accuracy of their statements.

City negotiator Mike Frisch has said Lightfoot’s office is still bargaining with the FOP to require officers to disclose when and where they work outside jobs and limit the number of outside work hours.

Identify the employee's original hourly rate

Start with the hourly rate an employee made before changing to a new rate. The increase took effect Feb. 1 and will be paid on March This means Mary is due retro pay for two semimonthly pay periods: Feb. 15 and Feb. Her March 15 paycheck will include her new rate, covering March 1 to March 15, so no retro pay is due for that period.

Calculation:

$70, / 24 (number of semimonthly pay periods in a year) = old semimonthly salary of $2,

$72, / 24 = new semimonthly salary of $3, $3, &#; $2, = $ difference in old and new semimonthly salaries

$ x 2 semimonthly pay periods = $ gross retro pay owed to Mary

If Mary&#;s new rate had taken effect after the start of any of the two pay periods for which retro pay is due — e.g., three or four days later — you would need to calculate her retro pay based on the difference in her old and new daily rates.

Payroll mistakes happen.

how long does a company have to pay, you retro pay

In this article, we define what back pay is, the difference between back pay and retroactive pay and how to calculate them.

Related:Hourly to Salary: How to Convert Your Wages and What to Expect When Transitioning

What is back pay?

Back pay is the amount due to an employee versus the amount they earned on their paycheck. Business owners are often stretched thin, covering a wide range of other responsibilities. You.

The Grand Lodge of the Fraternal Order of Police is a non-profit organization that was formed under the laws of the Commonwealth of Pennsylvania on November. To arrive at the gross retro wages, multiply the hours paid at the old rate by the difference in the old and new rates.

Example: John received a pay increase, from $12 per hour to $13 per hour. For salaried employees, the daily rate can typically be computed by Is lucky land slots legit the annual salary by 52 to get the weekly salary and then dividing the weekly salary by 5.

Calculating retro pay can be complex, and there may be legal considerations depending on your jurisdiction, so seek expert advice when necessary.

©

To learn more about our payroll processing services, click the button below.

Chicago PD gets first new contract sincewith 20% raises including back pay

By John Byrne
Chicago Tribune

CHICAGO — The Chicago Fraternal Order of Police’s first new contract in four years got its final approval during Tuesday’s City Council meeting, granting rank-and-file officers with a total of 20% in raises along with some accountability measures.

In a vote, aldermen cemented the deal between Mayor Lori Lightfoot and FOP Local 7 after years of tense negotiations over the contract for the union, whose members include more than 11, patrol officers, detectives and others currently active in the Chicago Police Department.

Before the vote, West Side Ald.

Jason Ervin, 28th, called on colleagues to support the FOP deal, saying it takes steps toward greater police accountability, though it is not “a finished product on police reform.”

“Now, granted, it is not where all of us would like to be,” but it’s “far from where we are,” said Ervin, who chairs the council Black Caucus.

Ervin called the contract a “good deal for taxpayers.”

But North Side Ald. Maria Hadden, 49th, said the city should stay at the bargaining table and keep pushing for more police reform.

“I don’t think that this agreement, at this point in time, is benefiting the residents of Chicago to the best it can,” Hadden said.

And Pilsen Ald.

Byron Sigcho-Lopez, 25th, said aldermen “have to get this right” to make sure police are held accountable for misconduct, and it doesn’t have enough teeth to do that.

“When we vote, let’s remember we’re voting on the safety of our constituents,” Sigcho-Lopez said.

After the vote, a protester in the upstairs council chambers gallery struck the glass partition and repeatedly shouted “You know that contract bogus!” before police led him out.

Besides Sigcho-Lopez and Hadden, the aldermen who voted no were Daniel La Spata, Matt Martin, Carlos Ramirez-Rosa, Michael Rodriguez, Rossana Rodriguez-Sanchez and Andre Vasquez.

The contract grants officers 20% raises over eight years, % of it retroactive towhen the last FOP contract expired.

Then, you calculate how many hours were incorrectly paid at the old rate. Learn more about how to calculate back pay, what it is, how it differs from retroactive pay and back pay calculation for hourly and salary employees.

How to Calculate Retroactive Pay

retroactive pay calculationRetroactive, or retro, pay is money due to an employee for work already performed but paid at a lower rate.

This most often occurs when there is a change in an employee’s salary or pay rate which goes into effect in the middle of a pay period. If you've underpaid your employees, you may owe them retroactive pay.

How to Calculate &#; Process Retroactive Pay (+ Free Calculator)

Retroactive pay (retro pay) is a payment made to an employee to make up the difference between what was paid and what should’ve been.

It can occur when salary is Chicago police retro check calculator in the middle of the pay cycle or a bonus was earned in the prior pay period.

You can use our simple calculator below to quickly calculate retroactive pay for hourly employees, salaried employees, and even for flat rate amounts.

Chicago police retro check calculator

Keep in mind that the calculator cannot calculate payroll with the impact of overtime in prior pay periods.

Disclaimer: Fit Small Business does not provide legal or tax advice. Be sure to confirm your retro pay calculations with your payroll provider or tax consultant.

Retro Pay Calculator

Retro Pay Calculations

Here are two simple ways to calculate retroactive pay:

To determine retro pay for an hourly employee, you’ll need to know how many hours were paid at the wrong rate so that you can determine the correct rate to pay.

You’ll multiply the differential rate by the hours paid incorrectly to calculate the gross retroactive pay amount. Taxes should be deducted from the gross amount to determine the net amount the employee should receive.

Calculating retroactive pay for salaried staff is a little more difficult than calculating for hourly workers. You’ll need to know the difference between the annual salary the employee was paid and the salary that should have been.

retro pay calculator excel

In addition, you should be able to verify the number of payroll days in the year (this is the number of days worked—making sure to deduct any holidays, weekends, and days off).


If you need to calculate retro pay while doing payroll, you need to first ask a few questions. For example, how long the employee was paid incorrectly, the pay rate they were paid for the time frame in question, and the rate of pay they should’ve received for the work.

Other questions to ask are:

  • Is the employee hourly or salaried?

    (So that you know which pay rate to use.)

  • Is the employee exempt from overtime, or do overtime hours have to be considered?
  • Does the retroactive pay affect only one pay period or more? Will you need to fix payroll accounting on the back-end?
  • Was the retroactive pay caused by missed hours, which may affect overtime calculations and need to be paid at overtime rates, or was there a discrepancy only in the pay rate itself?

Processing Retro Pay

The best practice to manage payroll payment errors like retroactive pay is to process a separate off-cycle payroll run using software like Gusto or to calculate the amount manually.

The ultimate goal is to pay the employee as soon as you realize the error.

Retro pay is taxable, whether paid as a lump sum or added to the next payroll in your existing payroll software. Regardless, you’ll need to make sure you deduct the correct payroll taxes from the retroactive payment.

Processing a special payroll run costs extra with some providers (unlike Gusto) that charge a fee for each payroll generated. In most states, it’s acceptable to wait and add the Chicago police retro check calculator amount to the employee’s check during the next pay cycle.

Keep in mind, however, that if overtime is involved in the pay period in which the mistake was made, you’ll need to adjust for overtime hours and/or use an overtime pay rate when calculating retroactive pay.

Retroactive Pay Laws

Once your company establishes a pay cycle, you should pay employees consistently. When it comes to retroactive pay, you’ll need to pay attention to your state’s labor laws to ensure that you remain in payroll compliance.

Chicago police retro check calculator

If an employee is terminated, your state may require you to submit retroactive pay immediately. And in cases when the error resulted in an overpay, you may not be allowed to correct it.

Payroll Rules Regarding Retro Pay

The Department of Labor (DOL) Wage and Hour Division states that employees must be paid each pay period and no later than 12 days from the end of the pay period.

State guidelines regarding labor laws like minimum wage, the frequency and length of pay periods, records retention, and whether or not a paycheck must be provided immediately upon termination.

Similar to regular pay, retroactive pay needs to be paid as soon as possible to ensure federal and state labor law compliance. In most states, this means cutting the employee a separate check or paying them the retro pay due on the very next pay period.

It’s important to know what the laws are for your specific state before issuing payments outside of your regular pay schedule to ensure that you are staying compliant.

For more help, check out our comprehensive guide to running payroll in your state.

chicago police pension list

(If your state is missing, then check back as we release new state guides weekly.)

Regular Pay vs Retro Pay vs Back Pay

It’s easy to confuse regular, retro, and back pay as they are all payments made to employees; however, different rules govern when and how you should pay each.

Retroactive Pay

Retroactive pay isn’t the same as back pay, although some people mistakenly use the terms interchangeably. To reiterate, retroactive pay is the difference between what was supposed to be paid and what was paid.

Back pay is paying someone for time worked in the past that was never paid in the first place.

Back Pay

Back pay is typically court-ordered, subject to damages (which doubles the amount of back pay due), and less common. Similar to regular pay, it’s a simple calculation of the number of hours worked multiplied by the pay rate.

Retro pay, however, is the number of hours worked multiplied by the difference between what was paid and what should’ve been.

Regular Pay

Regular pay is the wage you pay your Chicago police retro check calculator per pay period, typically based on an annual salary (salary/number of pay periods) or hourly rate (hours worked x pay rate).

Retroactive pay is the difference between the regular pay you should’ve disbursed and the regular pay you disbursed.

Situations When Retro Pay Might Be Needed

There are common situations when retro pay might occur in a small business, though it’s usually an accident that typically happens as a data entry or communications error. For example, incorrect information is entered on the time card or a raise is given but not communicated to the person running payroll.

Here are some more examples of situations in which you may need Cleopatra slots free play calculate retroactive pay:

Pay Raises: An employee received a pay raise of $ an hour by the owner, but the owner forgot to inform the payroll department; payroll runs the employee’s last paycheck using the old pay rate to calculate earnings.

The employee will need the difference paid as retro pay for the 40 hours in the prior period back to the date the raise should have taken effect.

$ per hour x (40 hours paid at the wrong rate) = $46 gross retro pay due

Shift Differentials: An employee typically works as a server, but one shift a week they work as a supervisor with a shift differential of 50 cents extra per hour. The employee was paid for all hours, but eight of those hours were paid using their regular pay rate, not the supervisor pay rate, so their next check has to be adjusted with $4 miscellaneous income added as retro pay:

Eight hours paid incorrectly x $ shift differential = $4 gross retro pay due

Overtime: An employee whose regular pay rate is $18 an hour worked 43 hours last week, but work time was added to the payroll as 40 hours.

The additional three hours of retro pay not only need to be paid but paid at times the regular pay rate as they are calculated as overtime in the prior pay period.

$18 regular pay rate x overtime rate = $27 overtime pay rate
$27 overtime pay rate x three hours paid incorrectly = $81 gross retro pay due

Bonuses: The employee earned a $ bonus but did not receive the bonus on the pay period.

How to Calculate Retroactive Pay - Payroll Management, Inc

  1. Retroactive to and ending in , the proposed deal must be ratified by police officers and the Chicago City Council before it takes.How to Calculate Retroactive Pay Retro Pay: How to Easily Calculate Retroactive Pay · Hourly Employee · First, you calculate the difference in hourly rate, which in this example.
  2. Retro Pay: How to Easily Calculate Retroactive Pay

    All,#payrollcheckup,RetroactivePay,PayrollVaultBestPractices

    Retro Pay: How to Easily Calculate Retroactive Pay

    Retro Pay:
    How to Easily Calculate Retroactive Pay

    Retroactive pay, or retro pay, is the money you owe an employee for work performed during a previous pay period. Here’s how to make a retro adjustment.

     

    It’s easy to think of payroll as a simple task — you pay your employees for the work they perform and the time they put in.

     

    But the payroll process gets complex quickly, enough to require a payroll professional to navigate the constantly changing legislation and requirements on a regular basis. There are so many moving pieces that are necessary in paying a staff on time and in full.

     

    What happens, though, when that payment is incorrect?

     

    This results in a common process called retroactive pay (or “retro pay”). Payroll mistakes are rarely intentional, but mistakes can still happen throughout the payroll process. Business owners are often stretched thin, covering a wide range of other responsibilities. It’s entirely possible that they may run into a scenario where retroactive pay is necessary.

    What Is Retro Pay?

     

    Retroactive pay makes up for the difference between the amount an employee was paid and the amount they were owed during that time. This most often occurs when there is a change in an employee’s salary or pay rate which goes into effect in the middle of a pay period. It is often paid as a separate payment or added to the next paycheck once the discrepancy is discovered.

     

    This is different from back pay, which sounds similar but is another process that is often discussed. Back pay means paying an employee their owed wages that were not ever paid. That is less common than retro pay, which is simply fixing a difference between what was paid and what was supposed to be paid.

    Image

    How to Calculate Retro Pay

     

    As with any payroll process, calculations depend on several factors, though these are often fairly simple to determine.

     

    Most importantly, you will need to verify the period of time there was a payment discrepancy along with the type of pay (hourly or salaried). Keep in mind, there are several legal guidelines dictating pay periods that could affect your calculations in certain situations.

     

    Let’s work out a couple of examples — one for an hourly employee and one for a salaried employee.

    Hourly Employee

     

    Let’s say your hourly employee has a good performance review and earns a pay raise from $22 per hour to $25 per hour. The raise takes effect on the first of the month, which happens to fall four days before the end of a pay period.

    First, you calculate the difference in hourly rate, which in this example is three dollars per hour. Then, you calculate how many hours were incorrectly paid at the old rate. If the raise took effect with four days to go in the pay period, that means four days of pay (using eight hours per day based on a hour workweek) need to be accounted for in the retro adjustment.

     

    • New rate of $25 per hour – Old rate of $22 per hour = $3 per hour difference
    • 4 days X 8 hours per day = 32 hours of payment at the old rate
    • $3 per hour X 32 hours = $96 due in retroactive pay

     

    In this example, the employee would be owed $96 in gross retro pay.

    Salaried Employee

     

    Though the process of calculating retroactive pay for salaried employees is similar, there is an extra step. Here, you need to factor in the pay periods. Are they semimonthly, such as the 15th and 30th of each month, or simply every two weeks?

     

    Semimonthly would mean dividing the annual salary by 24 (12 months times two), while biweekly pay would mean dividing the annual salary by 26 (52 weeks in a year divided by two).

     

    Let’s assume for this example: a salaried employee reaches a work anniversary that is accompanied by an agreed-upon raise, bringing their annual salary from $60, to $65, This company pays on a semimonthly basis, meaning there are 24 pay periods in each year. The raise took effect at the start of the month but will not be reflected in paychecks until the second pay period of the month, meaning a full pay period should be accounted for in retro pay.

     

    • Old Annual Salary of $60,/24 Pay Periods = Old Rate of $2, per pay period
    • New Annual Salary of $65,/24 Pay Periods = New Rate of $2, per pay period
    • New Rate of $2, – Old Rate of $2, = Difference of $ per pay period
    • $ per pay period X 1 Pay Period = $ is due in retroactive pay

     

    Only one pay period needed to be remedied in this example, so the employee would be owed $ in gross retro pay.

    No One-Size-Fits-All Approach

     

    Of course, these examples are purely hypothetical and simplified to explain the process. There are a variety of reasons for retro adjustments to be made, including bonuses that need to be paid out, and several correlating methods of calculating the pay that is due. There are also tax implications that need to be factored into these payments, as wages are still subject to any necessary payroll taxes.

     

    Navigating the retro pay process represents another complexity that leads many business owners to seek outsourced payroll and workforce management expertise. From calculating and executing retro pay to providing a new employee orientation checklist to simplify your onboarding process, contact your local payroll pros at Payroll Vault. That way, you can focus on the business operations that truly fill your passion.

     

     

     

    Originally posted on PayrollVault.com. 

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    Retro Pay: How to Easily Calculate Retroactive PayPhoneSign In

    Mistakes happen in business, even with your payroll. Sometimes you accidentally underpay your employees. If so, you will owe them retroactive pay (or retro pay), and you’ll need to make a payroll correction.

    Keep reading to learn:


    • What retroactive pay is
    • How to calculate retroactive pay

    What Is Retroactive Pay?

    Retroactive pay refers to pay that you owe an employee for work they did in a previous pay period. You would owe an employee retroactive pay if you paid them less than what you should have paid them. 

    For example, say that you have an employee named Todd. Todd earns $30 per hour as a project coordinator. In the last two weeks, Todd worked a total of 80 hours. However, due to a payroll mistake, you only paid Todd for 70 hours of work. 

    In this case, you now owe Todd $ in retroactive pay for the 10 hours you missed.

    Situations that might create a need for retroactive pay include:

    • Raises: You gave a raise but didn’t immediately change the rate in your payroll system.
    • Payroll Errors: You paid for the wrong amount of time or experienced another unexpected glitch.
    • Overtime Miscalculations: You calculated an overtime payment incorrectly.
    • Multiple Pay Rates For Different Positions: If an employee earns two different pay rates, you may have used the wrong rate when calculating their earnings for a given period.

    Retroactive Pay vs Back Pay

    Back pay might sound like another way to say retro pay, but they are different. 

    Retroactive pay is used as a correction when you paid an employee less than they should have earned. Back pay corrects any type of missed wages. It refers to any wages you owe your employee when you don’t pay them. 

    Examples of situations where you might owe back pay include:

    • Unpaid Wages Or Bonuses
    • Wages For Overtime
    • Commission

    The main difference is that back pay is money that you haven’t paid your employees yet. Retro pay is money that you owe your employees because you underpaid them in a previous pay period.

    Court Ordered Retroactive Pay

    Retroactive pay is usually necessary because of simple human error with payroll. However, there are some cases where a court can legally order a business to provide retroactive pay. 

    These include: 

    • Discrimination: When one group of employees receives preferential treatment over another (i.e., all men receive raises, but no women do)
    • Breach Of Contract: When a business intentionally pays employees at a lower rate than their contract states
    • Retaliation: When a business owes wages because they fired an employee for whistleblowing
    • Failure To Pay Overtime: When a business commits an overtime violation

    How Does Retroactive Pay Affect Taxes?

    When you pay employees retro pay, you still need to withhold payroll tax.

    For tax purposes, retroactive pay is treated as supplemental wages. Supplemental wages are wages that employees receive in addition to their regular income. 

    Since supplemental wages are non-regular wages, the method for withholding taxes is a bit different. 

    When you give retroactive pay, you still need to withhold federal income tax and FICA taxes (Social Security and Medicare Taxes). 

    Calculating Federal Income Tax

    The amount you withhold for federal income tax depends on how you pay retroactive wages. There are two methods: aggregate and percentage.

    The aggregate method involves combining the supplemental wages (i.e., retroactive pay) with regular wages in one lump sum. 

    In other words, you can add retroactive wages to an employee’s next paycheck. If you choose this option, reference the federal withholding tables in IRS Publication

    On the other hand, if you provide retroactive pay as a standalone payment, you need to withhold a flat-rate tax of 22%. This is known as the supplemental method.

    How To Calculate Retroactive Pay By Employee Type

    When you calculate retro pay, you simply need to find the difference between what you owe your employees and what you paid them. 

    Remember to use gross wages when calculating retroactive pay. Once you know the difference, then you can calculate the tax withholdings.

    Calculating Retroactive Pay For Salaried Employees

    Retroactive pay is most commonly needed with salaried employees when you give your employee a raise but don’t update their gross wages right away. 

    So, to calculate retroactive pay in this scenario, you need to know:

    • Old Annual Salary
    • New Annual Salary 
    • Number Of Pay Periods In A Year

    Let’s say that you have an employee named Susan. She earns an annual salary of $40,, but you have given her an $8, raise.  However, you forgot to adjust payroll wages after the effective date of her raise had already passed. You pay bi-weekly wages, giving you 24 pay periods in a year.

    Start by calculating her original gross pay per period. To do that, divide her old annual salary by the number of pay periods.

           $40,/24 = $1, gross pay per period

    Next, calculate her new gross pay per period after her salary increase by dividing her new annual salary by the number of pay periods.

           $48,/24 = $2, gross pay per period

    Last, subtract the amount you paid Susan from the amount you should have paid her to find the difference. 

           $2, - $1, = $ 

    In this example, you owe Susan $ for each pay period that she was underpaid. If three pay periods went by before you updated her gross pay, you owe her a total of $ in retroactive pay ($ multiplied by 3 pay periods).

    Calculating Retroactive Pay For Hourly Employees

    Let’s say you have an employee named Owen. Owen worked 40 regular hours plus 7 overtime hours. However, by mistake, you paid him for 47 hours at his standard pay rate. 

    Owen earns an hourly rate of $12 per hour and an overtime rate of $17 per hour. Here is how you calculate the retroactive wages for his overtime pay:

    First, calculate the difference in hourly payment.

           $17 - $12 = $5 per hour difference in pay

    Second, multiply the per hour difference in pay by the number of overtime hours.

            7 overtime hours x $5 per hour = $35 gross retro pay owed to Owen

    On the other hand, if you gave Owen a raise from $12 to $14 per hour, you would simply multiply the per hour difference by his entire pay period.  Let’s say you gave Owen a raise, and he worked 40 hours during his pay period. 

    First, calculate the difference in hourly payment by subtracting his old rate from his new rate.

           $14 - 12 = $2 per hour difference in pay

    Second, multiply the per hour difference in pay by the number of hours worked during the period.

            40 hours x $2 per hour = $80 gross retro pay owed to Owen

    Let’s Wrap It Up: Take The Pain Out Of Retroactive Pay

    Payroll mistakes aren’t common, but they do happen. In most cases, it’s an accident. 

    When you make a payroll mistake, don’t fret. Just make sure that you remedy your oversight in a timely manner. Ultimately, you want to treat your employees fairly and pay them what they’ve earned.

    To learn more about paperless payroll solutions, explore Hourly’s Payroll Platform today.

    How to Calculate Back Pay

    By Indeed Editorial Team

    Updated February 22,

  3. How to Calculate & Process Retroactive Pay (+ Free Calculator)
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The bonus can be paid with a separate $ check as retro pay. You will need to deduct taxes, though you do have the option to gross up the bonus calculation to ensure your employee receives a certain amount after taxes, if you’d prefer.

There’s no retro pay calculation for this because it’s a flat amount.

Bottom Line

Retro pay situations happen, and you must address the problem sooner rather than later.

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A best practice is to pay the employee with a separate payment as soon as you discover they’ve been paid incorrectly. However, in most states, you’re allowed to wait and add the retro pay amount onto the next pay period’s earnings.

The best way to avoid retro pay issues is to use software like Gusto, a full-service payroll system that helps you calculate and pay your employees—plus payroll taxes.

It also has a simple time tracking system you can use to ensure employee work hours are accurate, which helps to prevent the need for retro pay. It can handle retro pay and any taxes you need to pay on it. Sign up for a free trial.

Visit Gusto

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