Employment Law Questions? Ask an Employment Lawyer.
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First, your employer always has the ability to reduce your pay moving forward unless you have an express agreement guaranteeing a particular rate of pay for a set period of time. So, the question of whether our pay should be reduced in a 27 pay period year is legally irrelevant, since regardless of whether the math makes sense your employer could simply cut your pay. They don't need justification or reason.
But even if this were not the case, what you describe is legal and actually a rather standard practice. It is designed to address the fact that bi-weekly paychecks only cover 364 days in a year, not 365 (or 366 in Leap Years). Those extra one or two “unaccounted for” days add up to create an additional pay period every 11 years, and this can only be offset by a wage decrease to account for that additional payday.
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Thank you for your reply.
First, as noted above, it doesn't matter whether the math actually supports what your employer is doing because they have the right to reduce your pay no matter what. But the math actually does support it.
The reason is this. If you multiply 26 x 14, you only get 364 days, not the 365 that are actually in a full year or the 366 that are in a leap year. So, your "annual" salary paid biweekly is actually giving you slightly more than a year's salary, it is giving you a full years salary for what amounts to one day less than a full year or two days less than a full year in a leap year. Every 11 years, this works out to one extra pay period, which if your employer did not offset for would result in you being paid more than your annual salary. The 4% reduction offsets for this.
I hope that helps explain things better.
"By my calculations if what you state is correct after 11 years they owe me an extra paycheck because they only paid me for 364 days not 365 or 366 on a leap year"
This is incorrect. I can see how it is confusing, but what is actually happening is that you are being paid an ANNUAL salary and your employer is just breaking it up into 26 biweekly payments. The salary is ANNUAL, meaning intended to cover you for the whole year, but yet in a biweekly system 26 pay periods only covers 364 days. So, you are actually getting paid for a full year in a span of time that is one day less than a year, hence the overpayment. This adds up over the course of years along with leap years and you get to a full pay period of overpayment, which this adjustment is designed to offset.
No it doesn't. Your annual salary is intended to be your salary for the full year. A year is 365 days and yet being biweekly you get your full year's salary in 364 days. Hence you are being OVER paid, not under paid.
"Doesn't an annual salary cover the whole year? Isn't that what annual means? "
Yes, that is what it means, and it is precisely because that's what it means that your employer is logically justified in reducing your pay. Again, the salary is for the YEAR but you are getting it all in less than a year. More specifically by one day less than a year and two days less than a year in leap years. This adds up over time, and your employer is offsetting for it.
Let me give you a slightly easier example to follow. Let's say I agree to pay you $10 once a week. That should work out to $520 over the year because there are 52 weeks in a year. However, what if on 7 occasions I pay you a day early, and then make the next "weekly" payment one week from that day. This means you would have your $520 7 days before the end of the year. If I then kept paying you $10 a week, you would actually have gotten $530 over the course of the year. This is what happens overtime as a biweekly employee. That surplus of days builds up over the course of years leading to payment in an amount equal to one pay period more than your actual annual salary.
I really don't think I can explain it any other way. You will have to trust me that what I am explaining is correct, because it is. Here is another resource that may help explain it to you.
I hope this helps.
You are correct there is not a 27 week pay period. That's not the issue. The issue is that since the bi weekly pay periods are always two weeks after the last one and there is one fewer day in a year than there are 26 pay periods and additional pay period "accumulates" from the extra days.
Did you review the resource I linked to? It is explaining the exact same thing I am. Your employer is explaining the same thing too. I can assure you we are not wrong.
Effectively, there is 1/14th of an extra pay period each year, and 1/7 of an extra pay period in leap years. Add those up and you get the full extra pay period. It's not all in one year, it's cumulative.
I think we are going in circles at this point. I will opt out in case another attorney wants to jump in. Best wishes to you.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
I am a DIFFERENT CONTRIBUTOR, as your previous contributor has left and opted out of the question.
Your previous expert was correct in stating that employment in MA is deemed to be "at will" which means the employer may set the rate of pay and hours of performance as the employer deems fit as long as they provide advance notice to the employees. Furthermore, in MA, salary is set and determined by the employer, the employee does not have a "right" to a certain amount of pay beyond minimum wage. Thus, legally an employer may reduce the employee's pay to account for the leap year pay period.
As far as salary goes, the laws on salary employment were designed to benefit the EMPLOYER, not the employee. The US Department of Labor Wage and Hour Division and the MA Wage laws state that the salary employee may be required to work as many hours as the employer requires to complete their work and they are not entitled to any additional pay for doing so. Thus, even though you may work an extra day or work additional hours as a salary employee, the laws are set up to favor the employer on that, not you as an employee.
So, while you may be upset that the employer is reducing the pay to account for the leap year, it is not illegal for them to do so.