HR Corrects error in calculating salary
November 25, 2008 by Rob Carver
About a month ago, the University corrected an error in the calculation of biweekly salary by adjusting some employees biweekly pay and by paying affected employees a retroactive sum equal to approximately 0.2% of their gross salary. For more information on the university adjustment and payout, click here. This error was discovered by Geoff Selig as part of the ongoing CUPEU salary and retroactivity verification exercise. The following is an overview of how CUPEU originally presented the situation to the University.
The University calculates an employee's biweekly gross pay by dividing the employee's annual salary by the number of pay periods in a year. The University contends that, on average, there are 26.1 pay periods in a year. As such, the University calculates the portion of an employee's salary that is paid each pay period to be the employee's salary divided by 26.1. Thus, by example, let us assume an employee whose annual salary is fixed at $50,000. This employee receives $50,000 / 26.1, or $1,915.71, each pay period (that is to say, every two weeks). However, some years contain 26. 2 pay periods; some, 26.1; and others exactly 26 pay periods. Over the last eighteen years (i.e., the fiscal years from 1980/1 to 2007/8), the average number of pay periods was actually 26.0875, not the 26.1 assumed by the University. Because of this, the University, over that period, has underpaid its employees, and, specific to this grievance, its professional employees. Using the example above, the professional employee who earned $ 50,000 annually was paid $1,950.71 every two weeks. Because the number of pay periods per year was less than expected, our employee received an average salary of $49,975.28 ($1,915.71 x 26.087 pay periods) rather than the $50,000 actually owed resulting in an average annual underpayment of salary over the last eighteen years of approximately $24.72 per year.
The number of working days in a given year may be 260, 261, or 262. However, the University's contention that the number of pay periods averages, over time, to 26.1 exactly is incorrect; rather, the number of working days in a year, averaged between 1994 and 2008, is actually 260.875.
This error represents, over the past ten years, an underpayment of some $247.20 for an employee such as the one described above. The amount owed will vary depending on each professional employee's date of hire and salary.