PAYROLL: Salary Indicator for a Hourly Employee

I wanted to share this lesson that I learnt from the HR Business team today:

Do not quote annual salary figures to new hires who will be on non-exempt basis. Always indicate the hourly rate to the person. If an annual salary is indicated to a non-exempt, then there could be rounding issues as explained in the example below:

Assume that the annual salary which has been indicated to a non-exempt new hire is $60000. The standard working hours for the person is 37.5 hrs per week. So the hourly rate for the person will be 60000/ (37.5*52) = 30.76923. If this is rounded to 30.77 per hour. So the annual salary will be 30.77 * 37.5*52 = 60001.5. Though the employee may not complain (because he/she is getting more than 60K), the same employees would scream foul if they got lesser than 60K.

Assume that the annual salary that is quoted to a new non-exempt hire is $44,000. If the standard work hours for this person has been defined as 37.5 hours per week then the hourly rate will work out to 22.5641. If this is rounded to 22.56, then working backwards, we can see that the annual salary that this person earns would be $22.56*37.5 hrs per week * 52 weeks per hour which would be 43992.00 which is a good eight dollars less than what was indicated in the offer letter. Surely this would raise some questions, some of which may even have a legal implication.