Below are three commonly used payroll formulas for calculating adjustments to pay.

Pay Exception Calculation (Pro-ration Formula)

The Proration Formula for Exempt Employees is used when departments need to adjust an exempt employee's monthly salary due to time off without pay, unpaid leave of absence, etc.

  1. Rate of Pay/Total Number of Working Days in the Month = Daily Rate
  2. Daily Rate * Number of Days to be Paid = Amount to be Paid

Paid Benefit Time Calculation (Monthly Only)

The Paid Benefit Time Calculation for Exempt Employees is used when the employee’s status has changed; for example, work hours drop to less than 20 hours per week or termination.

  1. Annual Rate / (Weeks Worked * Hours per Week) = Hourly Rate
  2. Hourly Rate * Number of Hours to be Paid = Amount to be Paid

Gross Up Formulas

Gross-up formulas are used when departments elect to issue payments that also cover the individual's taxes. For example, if a department wants to issue a net payment of $1,000.00, it would use the gross-up formula to determine the applicable gross pay. As a reminder, fringe benefit charges are applied to the grossed-up amount.

Use the guidance below to determine the gross amount to issue to the employee or non-compensatory student.   Examples of each calculation are available. 

  • Divide the Desired Net Amount by 0..660 if the employee has not met his/her OASDI Maximum for the calendar year. 
  • Divide the Desired Net Amount by 0..722 if the employee has met his/her OASDI Maximum for the calendar year. 
  • Divide the desired Net Amount by 0.713 if the employee has met the $200,000 Medicare wages threshold for the calendar year. 
  • Divide the Desired Net Amount by .7365 if the non-compensatory student is exempt from OASDI and Medicare taxes for the calendar year.