Our employees are salaried by week. They do not work set hours (40, 50, 60). Each week varies according to schedule needs. Their payroll impact should be their weekly salary each week--unless they work so many hours they fall below minimum wage requirements. Square does some silly annual calculation then divides by number of hours and is TOTALLY incorrect for each employee EVERY pay period. The calculation is basically worthless.
I think what Square was trying to accomplish was making sure that salaried employees do not work so many hours that their hourly rate falls below minimum wage as this is illegal for most industries.
There is some convoluted calculation in an attempt to come up with an hourly rate that is then applied to each hour the employee works. No. Just NO. Unless an employee is SPECIFICALLY on an hourly salary (exempt), the hourly salary should be calculated AFTER the hours scheduled/worked--NOT beforehand. This gives a true reflection of the salaried employee's impact on payroll costs, it allows for more accurate forecasting when scheduling, and it ensures that minimum wage requirements are met or exceeded--or need to be corrected for.
It's really not that difficult to add the parameters into a salaried job's position information. Simply ask:
1. What is the employee's salary? EX: $1126
2. How frequently is the salary paid? Hourly, weekly, monthly, yearly?
3. Is the employee exempt from overtime?
4. Should the employee's salary be adjusted if the hourly average falls below a certain amount? Yes or no?
5. If yes, what is the minimum allowed hourly rate?
Then, based on the scheduled hours for the employee and/or the actual hours worked, Square could do several things:
1. Show on the schedule planned what the employee's impact to payroll will be on any given day.
2. Create an advisory when needed that the employee is scheduled such that their hourly rate will fall below the minimum required.
3. Once an employee creates a timecard, Square should then show the proper salary as entered by the employer UNLESS it needs to be adjusted upwards due to high hours worked. In other words, unless adjustment is legally required, the employee's payroll cost for the week should be the salary entered originally by the employer--not a skewed and inaccurate Square calculation.
For instance, Employee A is salaried at $1126/week and is exempt from overtime. They are placed on the schedule to work 10 hours per day for 7 days per week. $1126/7 days = $160/day impact expected on payroll costs. Forecasting.
If Employee A actually winds up working 70 hours. $1126/70 hours = $16.09/average hourly rate. In the State where I am, that currently exceeds minimum wage. There would be no adjustment required to the employee's check. Their weekly time card would show wages of $1126.
However, if Employee A works 93 hours (and they should really find another job if that happens on any kind of regular basis), their effective hourly rate would be $1126/93 hours = $12/hr. Starting July of 2026, in my state an employer would have to correct their effective rate by $1 per hour to $13/hour to meet legal minimum wage requirements. Square could automatically adjust payroll upwards as follows: 93 hours x $13/hour = $1209 in wages are due to the employee for that week.
Square users have been asking for some version of this correction since as far back as 2016 (that I've found). Nearly 10 YEARS. That is just a supreme lack of listening to your users. Enlist the help of an employer who uses salary extensively along with an HR/payroll expert (and I am sure you have one of those on staff) and fix this issue. This is one reason why we would NOT use Square Payroll. I would not trust them to accurately pay my employees if Square cannot even correctly calculate salaries on the front end.
