PAYROLL

POLICY AND PROCEDURES

Prepare# $y: Appro%e# $y: Re%!s!on Date: E&&e't!%e Date:

PURPOSE:
To provide guidelines relative to payroll matters.

SCOPE:
This procedure applies to all U.S. domestic company X employees.

POLICY:
It is Company Xs policy to pay its employees on a regularly scheduled basis.

DEFINITIONS:
Exempt Employees E empt employees are employees compensated !or the per!ormance o! a "ob instead o! by the hours #or$ed% and there!ore are not paid overtime !or time #or$ed in e cess o! &' hours per #ee$. (easonable overtime is o!ten normal and e pected !or e empt positions. E empt employees are not covered by the minimum #age and overtime provisions o! the )air *abor Standards +ct ,)*S+-. Non-Exempt Salary Employees .on/e empt salary employees are employees paid a !i ed salary !or time #or$ed. 0ours #or$ed in e cess o! &' hours per #ee$ are paid at a calculated rate o! ,1time% in addition to their regular salary. This hal! time rate is not a speci!ied rate it varies !rom #ee$ to #ee$. This classi!ication only includes positions 2uali!ied by 3epartment o! *abors !luctuating #or$#ee$ standard% and permitted by state la#. .on/e empt employees are covered by the minimum #age and overtime provisions o! the )*S+. Non-Exempt Ho rly Employees .on/e empt hourly employees are employees paid !or time #or$ed. 0ours #or$ed in e cess o! &' hours per #ee$ are paid at a rate o! one and one/hal! ,41times their regular pay rate. This classi!ication includes all other non/e empt employee types. F ll-T!me Employees +n employee #ho #or$s at least 56 hours per #ee$. Such employees are eligible !or company bene!its. )ull/time employees #ill accrue paid time o!! and holiday pay based upon eligibility to receive such bene!its. Such employees are eligible !or company health and #el!are bene!its. Temporary Employees +n employee #ho is hired !or a "ob or assignment #ith an established speci!ic period o! time% not to e ceed 7' days% #ith a de!ined start and end date. Temporary employees are not eligible !or company health and #el!are bene!its and do not accrue paid time o!! or holiday pay. Part-T!me Employees +n employee #ho normally #or$s less than 56 hours per #ee$. 8art/time employees are paid !or time #or$ed% normally on an hourly basis. Such employees are not eligible !or company health and #el!are bene!its.
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PROCEDURES:
"() PAYROLL PAY*ENTS 4.4 8ayroll payments #ill be made bi/#ee$ly via direct deposit or live chec$% #hich can be either pic$ed up at the local o!!ice location or mailed to the employees residence. )or those employees #ishing to receive a live chec$ rather than a direct deposit% paychec$s #ill be distributed to the employees by their supervisor or by the payroll department. U.S. citi:en e patriate payroll is paid out o! Company Xs payroll account on a bi/#ee$ly basis. .on/U.S. citi:en e patriate payroll is paid on a monthly basis rather than bi/#ee$ly to reduce #ire trans!er !ees. U.S. citi:en e patriates are eligible !or !ull bene!its% but the bene!its may di!!er !rom !ull/time U.S. domestic employee bene!its. Speci!ically% medical bene!its may re2uire payment in !ull !or services received outside the United States% and submitted claims are reimbursed at the appropriate level o! medical coverage. Company X accrues payroll on a bi/#ee$ly basis #ith the payday on the )riday !ollo#ing the end o! the period. I! a holiday occurs on a )riday #hen a payday is due% the company #ill pay on the Thursday prior to the )riday instead.

4.9

4.5

+() TI*E REPORTIN, 9.4 +ll employees are responsible !or preparing and signing a #ee$ly time sheet% #hich must be submitted to the payroll department no later than 5pm EST on the ;onday !ollo#ing the end o! the #ee$. +ll time sheets must include the !ollo#ing in!ormation< 9.4.4 9.4.9 9.4.5 9.4.& 9.4.> 9.9 Employee name and number Company name =!!ice number Codes ,class and #or$0our and "ob summary o! billable hours

The employees manager must approve and sign all time sheets. I! an employee is absent ,illness% in"ury% etc.- the day the time sheets are due% the employees manager should complete the !orm to his?her best ability and submit it to the payroll department. Employees must include on their time sheet the time !or days #here the employee has been absent due to illness or vacation. This #ill ensure that such paid time o!! is re!lected #ithin the employees sic$ and vacation pay accrual record. The respective o!!ice administrators are responsible !or creating a consolidating spreadsheet that contains the locations employee time reporting in!ormation% signing the spreadsheet% entering the time sheet in!ormation into the accounting system each ;onday !ollo#ing the end o! the #ee$% and submitting the consolidating spreadsheet to the payroll department. +ll in!ormation entered into the accounting system #ill be trans!erred into the payroll system. The corporate payroll administrator is responsible !or veri!ying the #ee$ly payroll data% inputting the payroll data into the payroll system% and transmitting payroll.

9.5

9.&

9.>

-() HOLIDAY SCHEDULE Company X observes 4' paid holidays% #hich includes one corporate designated holiday. The holiday schedule is distributed to Company X employees via intero!!ice memo ,email- be!ore @anuary 4 and maintained on Company Xs Intranet site. =nly !ull/time employees are eligible !or holiday pay. Temporary employees #ill have the day o!! #ithout pay. 3ue to business necessity% i! an employee is re2uired to #or$ on a Company X holiday% the employee may A!loatB the day #or$ed !or a paid day o!! to be used be!ore the end o! the calendar year. 8rior approval !rom an employees manager is re2uired !or any Company X paid holiday that
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is #or$ed. The payroll administrator and the accounting system maintain a trac$ing record o! holiday time ta$en% #hich serves as holiday pay reconciliation to ensure that each !ull/time employee receives the appropriate holiday pay. Holiday .e# CearDs 3ay Eood )riday ;emorial 3ay Independence 3ay *abor 3ay Than$sgiving 3ay 3ay +!ter Than$sgiving Christmas Eve Christmas 3ay .() /ACATION Company Xs vacation calendar corresponds to Company Xs !iscal year. Eenerally% employees #ill be eligible !or some vacation the !irst o! the month a!ter si months o! employment. The period !or earning% using% and maintaining vacation records #ill be the !iscal year% +pril 4 through ;arch 54 o! any given year. Facation time can be used in minimum increments o! 1 day. To ta$e vacation% you must re2uest and receive advance approval !rom your supervisor. (e2uests #ill be revie#ed based on a number o! !actors% including business needs and sta!!ing re2uirements. In addition to the vacation policy described above% persons employed by Company X in the state o! Cali!ornia #ill be sub"ect to the !ollo#ing vacation guidelines% in accordance #ith Cali!ornia State *a#. +ll !ull/time regular employees #or$ing in the state o! Cali!ornia #ill accrue vacation at the appropriate rate in the current !iscal year a!ter !ul!illing re2uired #aiting periods. In accordance #ith Cali!ornia *a#% vacation hours #ill carry over and accrue up to an allo#ed ma imum cap o! X hours. When an employees vacation accrual reaches the maximum cap, additional vacation hours will not continue to accrue until the employee uses vacation time to bring the total accruals below the maximum cap. There is no retroactive grant o! vacation compensation or accrual !or the period o! time the accrued vacation #as at the cap. Facation accrual is as !ollo#s unless other#ise stated in an employment contract< *ess than > years o! service > to 4' years o! service 4' or more years o! service .X days a month X.XX days a month X.XX days a month Observed on day% @anuary 4% 9' )riday% +pril ;onday% ;ay % 9' % 9' % 9' % 9' % 9'

day% @uly &% 9' ;onday% September Thursday% .ovember )riday% .ovember

day% 3ecember 9&% 9' day% 3ecember 9>% 9'

Facation earned but not used #ill be paid to employees #ho terminate as soon as administratively possible and #ithin !ederal and state guidelines. Facation ta$en and not yet earned is o#ed to the company% and the company #ill #ithhold the appropriate amount !rom the !inal paychec$ upon termination.

0() ILLNESS OR IN1URY 2NON-OCCUPATIONAL3 +ll regular !ull time employees are eligible% a!ter applicable eligibility period% to be paid !or #or$ missed due to illness or in"ury% up to the ma imum o! si missed days in any !ull !iscal year. 4() O/ERTI*E =vertime may be re2uired on a periodic basis o! both e empt and non/e empt employees. Supervisors are responsible !or authori:ing any overtime and noti!ying employees o! such e tra #or$ hours in advance i! possible. 5() CHEC6 RE7UESTS G.4 T !t!on Re!m8 rsement Employees are encouraged to participate in educational opportunities that maintain or improve the s$ills re2uired in the course o! their employment. Employees re2uesting tuition reimbursement must obtain approval !rom an e ecutive% and the 0uman (esources department ,0(-. The ma imum amount o! reimbursement an employee can receive per calendar year is HX. The approving e ecutive has the authority to set the reimbursement percentage associated #ith the reimbursement% not to e ceed HX per calendar year. +ll reimbursements !or such educational courses #ill be reimbursed upon receipt o! the employees grades or other criteria established by the e ecutive. Lost C9e':s Employees should report chec$s lost or other#ise missing to the payroll department immediately% so that a stop payment order may be initiated and a replacement chec$ may be issued. =nce the Company has determined that the chec$ has not been cashed% a replacement chec$ #ill be issued. *ost e pense chec$s #ill not be reimbursed until the ne t run o! e penses.

G.9

;() CHAN,E IN E*PLOYEE PAYROLL INFOR*ATION +ll pay ad"ustment in!ormation ,I/& !orm ad"ustments% employee status changes% etc.- must be submitted to 0( by ;onday% Jam !ollo#ing the end o! the pay period. )ailure to submit such in!ormation prior to the Jam deadline #ill result in the ad"ustments not being re!lected #ithin the employeeDs ne t paychec$. <() NE= E*PLOYEES 7.4 .e# employees are re2uired to !ill out all paper#or$ contained in the ne# employee pac$age and return the completed paper#or$ to 0(. =nly those employees #ho have completed and returned all ne# hire paper#or$ #ill be entered into the payroll system. =!!ice administrators are responsible !or ensuring that all ne# hire paper#or$ is complete. 0( is responsible !or entering all employees in!ormation into payroll system% including deductions% #ithholdings% and pay rates. Company X has appro imately X standard employee titles and corresponding position descriptions% #hich are listed on Company Xs Intranet site. I! a branch?o!!ice location believes that a ne# position description is necessary% the o!!ice must submit the title and corresponding position description to 0( !or approval. 0( must approve the ne# employee type and determine the )*S+ employee classi!ication ,e empt or non/e empt-.

7.9 7.5

")() RESI,NATIONS AND TER*INATIONS 4'.4 The o!!ice administrator or manager is responsible !or noti!ying Corporate o! an employee resignation or termination. Company X has a pre/determined email address that allo#s o!!ices to submit this in!ormation via email. The email should contain the employees last day #or$ed% the reason !or termination% i.e. lay/o!!% resignation% !or cause% and the accrued vacation time to be paid out. The distribution list !or this email includes corporate IT%
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corporate accounting% sa!ety% and 0(. =ther details o! the resignation or termination should be submitted to 0( in a separate email transmission% or sent #ith the termination paper#or$. 4'.9 +ll resigning and terminated employees are re2uired to submit a !inal time sheet !or determination o! accrued pay and any vacation bene!its. The employees !inal paychec$ #ill be processed !or the ne t regularly scheduled payday and subse2uently mailed or pic$ed up by the employee% unless other#ise mandated by state la#.