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Reading a Payroll Error from a Timesheet

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Reading a Payroll Error from a Timesheet

An employee is paid $17.50 per hour for the first 40 hours each week and 1.5× for overtime beyond 40. The timesheet shows: Monday 8.0 h, Tuesday 8.5 h, Wednesday 7.75 h, Thursday 9.25 h, Friday 8.0 h, Saturday 3.5 h. Company policy pays overtime for any hours over 8 in a single day AND for weekly hours over 40, but not both for the same hour. The employee's check this week was $836.50. The employee believes it should be higher and asks you to check it.

1. Compute total hours and the correct gross pay using the daily-and-weekly overtime rule.

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Daily overtime (hours over 8 per day): Tue 0.5, Thu 1.25, Sat 3.5 → 5.25 OT hours from the daily rule. Straight-time hours so far: total hours = 8 + 8.5 + 7.75 + 9.25 + 8 + 3.5 = 45.0. Daily-OT hours = 5.25, leaving 39.75 regular hours. Weekly rule: total 45 > 40, but 5.25 OT hours already counted; weekly OT beyond 40 would be 5 hours, which is less than 5.25, so the daily rule already covers it - take the greater OT count, 5.25. Regular = 45 − 5.25 = 39.75 h. Pay = 39.75 × 17.50 + 5.25 × 26.25 = $695.63 + $137.81 = $833.44.

2. The check was $836.50. Is the employee underpaid? Explain the likely discrepancy.

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Correct pay is $833.44; the check of $836.50 is actually $3.06 higher, so the employee is not underpaid. The likely cause: payroll may have applied overtime only to the 5 weekly hours over 40 (5 × 26.25 + 40 × 17.50 = $831.25) or used a slightly different daily rounding. Neither matches exactly, so the $3.06 gap suggests a rounding difference of a few minutes. The employee's belief is mistaken; the check is within a few dollars of correct and slightly favors the employee.

3. If policy changed so overtime applied only to weekly hours over 40 (no daily rule), what would the correct pay be, and how does it compare?

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Weekly-only: regular = 40 h, OT = 5 h. Pay = 40 × 17.50 + 5 × 26.25 = $700 + $131.25 = $831.25. That is $2.19 less than the daily-and-weekly result of $833.44, because the daily rule credited 5.25 OT hours versus 5. The daily rule pays more here since Thursday's 1.25 daily-OT hours plus Saturday's 3.5 exceed the 5 weekly-OT hours.