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Annualized Pay for 10-Month Employees

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Q: Is it permissible to pay 10-month employees over 12 months?

A: Yes. Most districts pay salaried employees who work a ten- or eleven-month schedule on an annualized basis. In this payment method, the salary is spread over 12 months. TASB HR Services' model contracts include a provision for annualizing salary.

In district Policy DEA (LOCAL), you can find language requiring all salaried employees to be paid over 12 months even if they earn their compensation based on employment that’s fewer than 12 months.  

Additionally, the Department of Labor (DOL), Wage and Hour Division (WHD), has determined such pay distribution is convenient for both parties and the annualized pay doesn’t disqualify an employee from exemption to the minimum wage and overtime requirements.

As to nonexempt employees, districts may pay over 12 months without affecting the minimum hourly wage requirements. However, any overtime pay must be paid out during the pay period in which the overtime is accrued.

For more information, search for compensation and employment contracts in the HR Library.

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Luz Cadena
Luz Cadena
Senior HR and Compensation Consultant

Luz Cadena has been an HR and compensation consultant with HR Services since 2006. Before TASB, she worked for a Central Texas ISD for eight years in the positions of compensation analyst, compensation coordinator, and director of compensation.

Cadena earned an associate degree in business administration from New Mexico State University, holds a bachelor’s degree in business management from Concordia University in Austin, and is a certified compensation professional (CCP).

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