Moving from Monthly Pay to Bi-weekly Pay Non-exempt employees who currently are being paid on a monthly schedule can use this document to help create a sample model of their bi-weekly paycheck. This tax modeling is only an estimation of the pay you earn on regular hours worked. Any overtime pay for hours worked outside your normally scheduled work hours would differ in each pay period and are not factored into estimation of your regular bi-weekly pay. This tax modeling also assumes you work at 100% time (7.5 or 8 hours per day) at the same hourly rate. If you do not work at 100% or if you work at varying hourly rates, you will have to determine what are you regular hours at which rate.

Guidelines There are 2 basic steps to creating a model of your bi-weekly pay. 1. First, figure out your bi-weekly gross earnings. Use the “Estimated Bi-weekly Gross Pay Worksheet” (page 3) to find your estimated bi-weekly pay. If you have more than one hourly earning rate, use a separate worksheet for each rate. Then add the bi-weekly gross amount from each worksheet to get your total bi-weekly gross amount.

Contents Moving from Monthly Pay to Bi-weekly Pay This page gives an overview to help non-exempt employees adjust their monthly pay into a bi-weekly pay. Bi-weekly Pay Reference Sheet Refer to the tables on this page if you need help understanding the terminology and concepts used in this document. Estimated Bi-weekly Gross Pay Worksheet Use this worksheet to determine your regular bi-weekly earnings— the amount you earn before taxes and deductions. Tax-Modeling Bi-weekly Net Pay After figuring out your Gross Pay, follow the instructions in this section to create a sample model of what your pay will look like after taxes and deductions.

2. Then, calculate your net pay after tax, reductions, and deductions. Follow the “Tax Modeling Bi-weekly Net Pay” instructions (pages 4-5) to determine what you would receive after taxes, reductions and deductions are taken out of your gross pay. You will log onto eTrac and use the Tax Modeling to determine your estimated bi-weekly net pay.

Web Sites eTrac: www.usc.edu/etrac eTrac information on access, browser configuration, PIN setup: www.usc.edu/payroll/etrac 2005 Bi-weekly pay schedule: http://www.usc.edu/dept/adminops/otis/pay_schedules.html

Contact Information If you have questions or need further assistance, contact your Home Dept. Coordinator. You can also call the OTiS Help Desk at 213-437-1830.

1

Last Updated: April 28, 2005

Bi-Weekly Pay Reference Sheet Understanding “Bi-Weekly” Pay

Terminology Non-Exempt Employee Non-exempt employees are eligible for overtime under the Fair Labor Standards Act. If you do not know your exemption status, check with your Home Department Coordinator. Bi-weekly A bi-weekly period consists of 10 working days, beginning on a Thursday and ending on a Wednesday. You are paid every 2 weeks. This is different from “Semi-monthly” pay, which is being paid twice every month, or every 14-16 days. 100% Time Worked Full-time employees who work at 100% time at USC work either 7.5 or 8 hour days. If you are scheduled to work less than 7.5 hours a day as part of your normal work day, you do not work at 100% time. Regular Hours Your “regular hours” is the time you are scheduled to work as part of your regular work day. Gross Pay This is your earnings—the amount you are paid based on your hourly rate and the number of hours you work at that rate. Net Pay This is the amount you receive after reductions, deductions, and taxes are taken out from your Gross Pay. Reduction Reduction amounts are taken before taxes. These are items that are not subject to taxes, such as health and dental insurance, retirement contributions, PPA, etc. Taxes Federal and State taxes are calculated based on the amount of your pay after reductions have been taken. Deduction Deduction amounts are taken after taxes.

A bi-weekly period consists of 10 working day, beginning Thursday and ending Wednesday. You are paid every 2 weeks, giving you 26 bi-weekly pay periods per year. This is different from a “Semi-monthly” pay frequency which pays twice every month for a total of 24 pay periods in the year. Because there are 26 bi-weekly pay periods in a year, two months in the year contain three bi-weekly pays. All applicable reductions and deductions will be taken out of the first two pay periods in the month—24 of the 26 bi-weekly pay periods in a year. The other two rd pay periods are 3 pay periods in a month and only pay-based reductions/deductions (basic retirement, disability, etc.) and accumulated deductions (USCard charges, etc.) will be deducted from them. For a schedule of the Bi-weekly Pay Periods and when deductions are taken, see the bi-weekly schedule on the Payroll Web site: http://www.usc.edu/dept/adminops/otis/pay_schedules.html

Reductions

Deductions

Items taken from your pay before taxes include but are not limited to:
Health Plan
Dental Plan
Basic Retirement Plan (see below)
Supplemental Retirement Plan
Disability Plans (see below)
Pretax Payment Account (PPA)
Accident Insurance
Parking Fees

Items taken from your pay after taxes include but are not limited to:
USCard Charges
Other Insurance Plans (Life, AFLAC, Long Term Care, etc.)
Monthly Fees/Dues (Union, University Club, etc.)

Pay/Accumulated Re-/Deductions

Re-/Deductions (Non-Pay Based)

Items taken from every pay period include but are not limited to the rd following items. The 3 bi-weekly pay in a month deduct only the items in this column.
Basic Retirement Plan (see below)
Disability Plans (see below)
USCard Charges

Items taken from only the first two pay periods in a month include but are not limited to:
Health Plan
Dental Plan
Pretax Payment Account (PPA)
Supplemental Retirement Plan
Insurance Plans (Life, Accident, AFLAC, Long-Term Care, etc.)
Monthly Fees/Dues (Parking, University Club, Union, etc.)

Disability & Retirement Plans The Basic Disability plan and Basic Retirement plan reductions are taken automatically based on a percentage of your pay and you do not need figure them into the tax modeling calculation. However, if you have any supplemental disability plan or supplemental retirement plan, you need to include them into your tax modeling reductions category.

2

Estimated Bi-weekly Gross Pay Worksheet If you are changing from monthly pay frequency to bi-weekly pay frequency, use this worksheet to figure out your bi-weekly amount. This would be your bi-weekly gross pay—the amount you earn before taxes & deductions. If you work at multiple hourly rates, use a separate worksheet for each rate. Then add the bi-weekly gross amount from each worksheet to get your total bi-weekly gross amount.

I. Determine your Hours and your Hourly Rate. There are two ways you can find your hourly rate and regular hours: Bi-weekly Hours

A. Go to your Home Department Coordinator and ask for: 1.

The number of regular hours you are scheduled to work in a bi-weekly period. If you work at 100% time, this would be either 75 hours or 80 hours.

2.

Your Hourly Rate—the regular amount you are paid per hour.

A Hourly Rate

B

If you know both your Bi-weekly Regular Hours and Hourly Rate, go to section II. Otherwise, continue to Method B to determine your hours and rate. B. Determine your Regular Hours and Hourly Rate. If you know your bi-weekly hours and hourly rate, skip this step and continue on to section II. 1.

If you work 100% time at the same earning rate, determine if you work a 7½ hour day or an 8 hour day. Then use the following chart to find the number of hours you are scheduled to work in a bi-weekly period and in a year. If you do not work at 100% at the same rate, determine how many regular hours you work in a day, then calculate your bi-weekly and annual hours. Note down your bi-weekly and annual hours. 100% Time at the Same Rate: Hours Worked Regular Hours Daily Bi-weekly

7.5 8

× 10 = Days

75 80

Bi-weekly Hours

Regular Hours Annually

A

1950

× 26 = Pays

2080

Annual Hours

C

Non-100% Time:

× 10 = 2.

× 26 =

Calculate your Hourly Rate.

Monthly Amount

D

a.

Find your monthly amount either from eTrac or from your pay stub/advice slip. This would be your monthly gross total earnings (before taxes, reductions, & deductions).

b.

Multiply your monthly amount by 12 (months), then divide by the annual hours to get your hourly rate: Monthly Amount D

Monthly Amount × 12 Regular Annual Hours

Hourly = Amount

× 12

Regular Hours Annually C

Hourly Rate

=

II. Calculate your Bi-Weekly Gross Amount To determine your bi-weekly gross earning amount, multiply your hourly rate by the number of hours you will work in a bi-weekly period: Hourly Rate × Bi-Weekly Hours = Bi-weekly Gross Amount Hourly Rate B

Bi-weekly Hours A



Bi-weekly Gross Amt

=

3

This is your earnings prior to reductions, taxes, and deductions.

B

Tax Modeling Bi-Weekly Net Pay The Tax Modeling calculator on eTrac can give you a sample model of what your pay check will look like after reductions, taxes, and deductions. If you are changing from monthly pay frequency to bi-weekly pay frequency, you will need to figure out your Bi-weekly Gross Amount before calculating a bi-weekly tax model.

I. Get your Monthly Tax Model. 1.

Log into eTrac: www.usc.edu/etrac

2.

From the eTrac main menu, select: “Tax Modeling”.

3.

Make the following selections for existing information: Do you want to use existing earnings information? Do you want to use existing voluntary deductions information?

YES YES

Click on the [Submit] button. 4.

The Tax Modeling Entry Page loads with all your current monthly earnings, withholdings and deductions. Don’t change any information. Scroll down to the bottom of the page, and click on the [Compute This Employee Information] button.

5.

The Tax Modeling Result Page loads with your current monthly tax model. Print out this page, which you will use to enter data for your bi-weekly tax model.

II. Calculate Bi-Weekly Tax Model with Reductions & Deductions 1.

If you are still on the Tax Modeling Results Page, click on the [Select Another Earnings/Deduction Criteria] button. Otherwise, start the Tax Modeling calculator from the eTrac main menu.

2.

Make the following selections for existing information: Do you want to use existing earnings information? Do you want to use existing voluntary deductions information?

NO NO

Click on the [Submit] button. The Tax Modeling Entry Page will load with your basic Federal and State tax information, but with blank earnings and deductions sections. 3.

On the Tax Frequency field, select: Biweekly

4.

You can change your Federal and State tax information at another time to experiment with how different settings affect your pay. For now, leave everything the same so we can get a direct conversion from your monthly tax model to a bi-weekly tax model.

5.

Scroll down the page to the Earnings Section. For most people, only the “Regular Earnings” is needed. Click on the [Edit...] button for the “Regular Earnings.”

6.

The Earnings Section Entry Page loads. Do not change any of the default descriptions. At the Dollar Amount field, enter your Bi-weekly Gross Amount. If you have calculated the bi-weekly gross amount formula from the “Estimated Bi-weekly Gross Pay Worksheet,” this would be the amount shown in the last box at the bottom of the page. Click on the [Save…] button. Your bi-weekly gross amount will be listed in the Earning section on the main Tax Modeling Entry page.

4

7.

Refer to the monthly tax model that you printed out in Section I. Since your monthly non-pay-based reductions/deductions will be split across two pay periods in a month, divide the reduction/deduction amounts on your monthly tax model by 2. Taxes and pay-based reductions (Disability, Basic Retirement) are calculated automatically, so don’t worry about them.

8.

Back on the eTrac Tax Modeling Entry Page, scroll down to the Voluntary Deductions Sections. Click on the [Edit...] button for a deduction type that you have. You will see the entry page for that deduction type. Don’t change any of the descriptions. Enter half of the amount shown on your monthly tax model for that deduction type. Click on the [Save…] button. The deduction amount will be listed on the Deductions table on the Tax Modeling main Entry Page. Repeat for each reduction/deduction type that you have. For reductions or deductions that do not have their own line, combine all other reductions in the “Other Reductions” line, and combine all other deductions in the “Other Deductions” line. Use your monthly tax model and the Reference Sheet to distinguish between reduction and deduction item. It’s important that you don’t mix them up since it would affect the tax calculation.

9.

When you are done, click on the [Compute This Employee Information] button. The Results page will display a model of your regular bi-weekly pay information.

III. Calculate Bi-Weekly Tax Model with No Reductions/Deductions To create a bi-weekly tax model of what your pay check will look like on a 3rd pay period in a month, follow the steps in Section II. You can skip step #7. For step #8, enter only accumulated deductions (e.g., USCard charges, etc.) that you anticipate will be taken out of the pay period. Taxes and pay-based deductions (e.g., Disability, Basic Retirement, etc.) are calculated automatically, so don’t worry about them. You can refer to the Reference Sheet to see which items to include in a 3rd bi-weekly pay.

5