A salaried employee's pay is normally the same every pay period: their annual salary divided by the number of pay periods in the year. When an employee doesn't work the full pay period, you pay them a prorated amount, which is a share of their normal paycheck that reflects the days they actually worked.

There are three common situations.

1. A new hire starts mid-period. If someone joins on the 10th but the pay period started on the 1st, they didn't work the first nine days. Their first paycheck is prorated to cover only the days from their start date through the end of the period. Every paycheck after that is their normal full amount.

2. A termination happens mid-period. When an employee leaves partway through a pay period, their final paycheck covers only the days worked up to their last day. Some states have specific rules about when a final paycheck must be issued, sometimes on the last day of work, so check your state's requirements.

3. A pay change takes effect mid-period. If a raise or salary adjustment lands in the middle of a pay period, that one paycheck is split: part is paid at the old rate for the days before the change, and part at the new rate for the days after. Later paychecks reflect only the new salary.

Other situations can also call for proration, such as an unpaid leave of absence or a change in schedule. The logic is the same in every case: pay for the portion of the period actually worked.

The most common method is a daily rate. You work out what the employee earns per working day in the pay period, then multiply by the number of days they actually worked.

Example: An employee earns $78,000 per year and is paid semi-monthly (24 pay periods), so each full paycheck is $3,250. Say a pay period has 11 working days and the employee started on the 6th working day, so they worked 6 of the 11 days.

Their next paycheck returns to the full $3,250.

There are a few acceptable ways to count days, such as calendar days versus working days, and the right approach can depend on your situation and your state. The important thing is to apply one consistent, defensible method.

For each of the situations above, the simplest way to pay a prorated amount is to create an off-cycle payroll and enter the prorated figure directly. Once you've calculated what the employee has earned for the partial period, run an off-cycle payroll for that employee and enter the prorated amount as their pay. This lets you pay the exact partial-period figure without affecting their regular salary going forward.

When you change an employee's salary, a change that lines up with the start of a pay period keeps that paycheck on a single rate and avoids proration entirely. A change that takes effect partway through a period means that one paycheck spans two rates. In Freedom, a comp change applies going forward and a mid-period change is flagged for manual approval when you run that payroll, so review that check to confirm the split is right.

Salaried exempt employees are protected under the Fair Labor Standards Act (FLSA), and their pay generally can't be reduced arbitrarily. Proration for a genuine partial period, such as a new hire, a departure, or a mid-period raise, is standard and appropriate. Reducing an exempt employee's pay in other circumstances can raise wage-and-hour issues. When you're unsure, confirm your situation with an HR professional or employment attorney before reducing anyone's pay.