Section 1-5 Salary

Another format for paying wages is a salary. As the textbook states on page 101, a salary is a "fixed amount of money that you earn on a regular basis." A salary is paid in different pay periods, just like the other types of pay; thus, it can be apportioned weekly, biweekly, semimonthly, or monthly. To compute a given amount of salary due per pay period, divide the annual (yearly) salary by the number of pay periods per year. Refer to the following chart and page 101 in the textbook for the pay period numbers.

The following chart shows the various pay periods and number of paychecks per year.

Be aware that if you are offered a promotion or a job with a salary, you may be expected to work full-time. On an hourly pay, that would be 40 hours per week. However, with a salary, you may be expected to work more than 40 hours per week. The same amount of salary is earned regardless of the number of hours worked. This is due to the fact that most salaried positions are awarded to skilled professionals, who are considered "exempt" from hourly restrictions outlined in the Fair Labor Standards Act.

Examine Examples 1 and 2 on pages 101 and 102 to review the salary per pay period. For each example and its exercises, the key to calculating the correct salary per pay period is matching the pay period name with the number of payments per year before dividing the annual salary into the number of pay periods per year. When you are required to compare two different salaries (such as in questions 10 and 12 on page 102), be sure to convert the pay to a common pay period before working with the numbers.