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If you’re a salaried employee and you’re slaving away at work today, you may be working for free.
Leap years present an odd compensation dilemma for employees who don’t get paid on an hourly basis. Such workers receive a set salary for a typical year, which is usually 365 days. But there's an extra day this year.
Alas, for most employers, it doesn’t matter if leap years have 366 days; they still end up paying salaried workers the same amount.
Does this mean you’re actually an indentured servant on February 29? Employment experts are divided on this question.
Daniel Schwartz, an employment attorney for Pullman & Comley in Hartford, Conn., believes employers are getting a free day of work out of their overtime-exempt employees.
“The annual salary is just that, and the paychecks just reflect the portion of the year. Many employers thus get a 'free' day of work from exempt workers because they are not paying anything more than in non-leap years,” he wrote on the law firm's blog this week.
Others don’t see it that way.
“It’s all baked in,” said Brue Elliott, the manager of compensation and benefits for the Society of Human Resource Management.
If you’re making $100,000 a year, he continued, you get paid that over the course of the year, either weekly, bi-weekly, etc., whether you work 365 or 366 days. “Most employers don’t pay exempt employees on a per diem basis,” he added. Typical offer letters to salaried workers don’t specify you’ll be working a certain amount of days per year, he pointed out. They typically say, “you’re paid on an annualized basis.”
For some salaried workers, the leap year may mean you make more money during this 12-month period.
According to Michael O’Toole, director of publications, education and government relations for American Payroll Association, 2012 has 53 Mondays. So that means, if an employees gets paid every Monday they’ll get 53 paychecks this year, compared to 52 paychecks in 2011.
When there are more weeks in a year, some employers reduce a worker’s weekly pay to make it all come out even at the end of the year, he explained. But, he added, “that’s not great human resources relations.”
Hourly workers don’t have to worry too much about this debate. In the end, they could end up getting an extra day’s pay for an extra day’s work if they work throughout the year and the leap day falls on a weekday, as it does this year.