Piece And Hourly Rate Payroll

Written by Kimberly Clark
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Depending on the size and nature of their particular business, owners might choose a number of different ways to pay their employees. The available options include performance-based payrolls, such as commissions, draws, and piece rate plans. However, the two most common compensation methods are salary and wage-based earning systems.

Salaried employees receive a preset amount of money doled out on a weekly, biweekly, or monthly basis. Generally, the salary is regularly received regardless of the number of hours the employee worked. On the other hand, wage earnings are typically paid on an hourly basis.

Hourly Rate

For workers paid an hourly rate, the total amount of money made is dependent on the job assignment and number of hours worked. In addition, payroll systems typically distinguish hourly pay rates by the number of hours the employees is expected to spend on the job each week. The standard work week consists of 40 hours and is often referred to as regular time.

Working less the 40 hours is considered part-time, whereas anything over 40 hours is termed overtime. Several guidelines must be followed when an hourly employee's work week exceeds 40 hours. Basically the rules state that workers are entitled to receive additional pay for excess hours worked, which can be paid at the employees regular hourly rate, that rate plus a half of it, or at twice the rate. If your company employs more than a handful of people, you may want to look into payroll software. It should be able to handle issues of overtime and differing pay rates.

Piece Rate

Workers that are paid on a piece-rate plan receive a specific amount of money for each item they produce. Therefore, their earnings, for the payroll period, are equal to the rate per item multiplied by the number of items they produced, processed, or repaired. In essence, the more they put out, the more they take in.

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