Page 138 - Essentials of Payroll: Management and Accounting

Compensation
It is, however, perfectly legitimate for different workweeks to be
assigned for different departments and locations. This is particularly
common when a company is acquired and elects not to conform to the
acquiree’s workweek. If there are many of these acquisitions, a centralized

payroll department may find itself tracking every conceivable variation
on a workweek, all within the same organization.

The Minimum Wage
The minimum wage is the minimum amount of money per hour that
must be paid to all employees—with some restrictions by type of indus-

try.The minimum wage is set by the federal government, though it can
be overridden by local law with a higher minimum wage requirement.
Consult with your state wage enforcement division to determine the
local rate.
To determine if an employer is paying at least the minimum wage,
summarize all forms of compensation earned during a workweek and
divide it by the number of hours worked. The most common forms of
compensation include base wages, commissions, shift differentials, piece-rate
pay, and performance bonuses. If the calculation results in an average rate

that drops below the minimum wage, then the employer must pay the
difference between the actual rate paid and the minimum wage.
Example. The Close Call Company, which specializes in making
rush deliveries, pays its delivery staff at a rate of $8 per delivery made.
In the last week, one employee completed 25 deliveries, which entitled
him to $200 in wages. However, because the minimum wage of $5.15
for the 40 hours worked should have entitled him to a base wage of

$206, the company must pay him an additional $6 in order to be in
compliance with the law.

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