Payroll processing for semi-monthly hourly employees is not as straightforward as that of biweekly hourly employees. Since some months have 30 days and others have 31 days, a semi-monthly hourly employee’s pay will often vary according to the different number of days.

For example, an employee may receive payment for 13 days during one pay period and 12 days in the next pay period. However, the most common payment period for semi-monthly employees is 86.67 hours. You then calculate overtime and apply the adjustments during the next pay period.

Just like the name implies, semi-monthly means an event that occurs twice a month. Hence, a semi-monthly payroll is a payment cycle in which employers pay employees twice each month, with the due dates falling on the 15th and the last days each month.

## How to Prorate Semi-Monthly Payroll?

Since hourly employees are paid for the time worked, there is no need to prorate their wages. You only have to pay them for hours worked.

However, salaried employees receive a fixed sum each semi-monthly pay period. As a result of this, circumstances will typically arise that will require you to prorate salary.

### Deduction Conditions You Should Consider

If the federal law exempts an employee that earns a salary, he/she is not entitled to overtime pay. In the same vein, an employer should not deduct any amount from the employee’s salary, except such deduction is permissible by the US Department of Labor.

Also, you are not to deduct any amount from the employee’s salary. You can only do this when such deduction is permissible by the US Department of Labor.

Some examples of these deductions include unpaid disciplinary suspension, overuse of paid benefits, unpaid leave, and deductions if the employees did not work the entire pay period.

## How to Calculate the Prorated Pay?

To prorate a semi-monthly salary, you need first to find out the employee’s rate per day. A semi-monthly payroll occurs twice each month and 24 times each year. Also, as you should know, there are 2,080 workdays in a calendar year (52 weeks multiplied by 40 hours).

As a result of this, salaried employees are paid for 86.67 hours each semi-monthly pay period. You can calculate this by dividing the 2,080workdayss by the 24 semi-monthly payrolls.

It is not as complicated as calculus or trigonometry. You may not even need a calculator to determine the employee’s daily rate.

### Here’s how to do the math:

Divide the employee’s annual salary by 24, then divide the result by the number of working days in the semi-monthly pay period.

Similarly, you can multiply his daily salary by his total workdays to get his prorated semi-monthly salary.

## How to Calculate Overtime on a Semi-Monthly Payroll?

We calculate overtime based on the 7-day work period established by your employer. But it can sometimes get confusing to determine overtime on a semi-monthly payroll.

The need for overtime pay arises because most months have more than the twenty-eight days or four-weeks used to arrive at the standard 86.67hours. Also, in running a semi-monthly pay payroll, some workweeks begin and end in the same pay period, while others carry over to the next pay period.

You might want to find the average hours worked each week to calculate the employee overtime, but the federal law does not permit this. But you can figure it out using this format;

- Divide the semi-monthly payroll period into workweeks determined by your employer.
- Add the hours worked for the first workweek of the payroll period.
- For the second workweek, add the number of hours worked in the pay period and subtract 40 from the answer to find the overtime hours worked.
- Determine the number of hours worked in the final week of the pay period. It may either be a full week or a partial week. However, if the number of hours worked has not exceeded 40 hours, do not pay any overtime for that pay period,
- Add the overtime from each of the working weeks in the semi-monthly pay period.

And there you have it! The number of overtime hours.

From the points listed above, you can deduce the importance of accurate record keeping. As an employer who intends to adopt the semi-monthly pay frequency, you must be diligent with record keeping.

We recommend getting an electronic time, calendar, and attendance tracking system. Automating the attendance tracking system will help to record and pay for overtime correctly.