PAYROLL POLICY AND PROCEDURES

Prepared By:

Approved By:

Revision Date:

Effective 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 X’s policy to pay its employees on a regularly scheduled basis.

DEFINITIONS:• Exempt Employees – Exempt employees are employees compensated for the performance of a job

instead of by the hours worked, and therefore are not paid overtime for time worked in excess of 40 hours per week. Reasonable overtime is often normal and expected for exempt positions. Exempt employees are not covered by the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA).

• Non-Exempt Salary Employees – Non-exempt salary employees are employees paid a fixed salary for time worked. Hours worked in excess of 40 hours per week are paid at a calculated rate of (½) time, in addition to their regular salary. This half time rate is not a specified rate it varies from week to week. This classification only includes positions qualified by Department of Labors’ fluctuating workweek standard, and permitted by state law. Non-exempt employees are covered by the minimum wage and overtime provisions of the FLSA.

• Non-Exempt Hourly Employees – Non-exempt hourly employees are employees paid for time worked. Hours worked in excess of 40 hours per week are paid at a rate of one and one-half (1½) times their regular pay rate. This classification includes all other non-exempt employee types.

• Full-Time Employees – An employee who works at least 36 hours per week. Such employees are eligible for company benefits. Full-time employees will accrue paid time off and holiday pay based upon eligibility to receive such benefits. Such employees are eligible for company health and welfare benefits.

• Temporary Employees – An employee who is hired for a job or assignment with an established specific period of time, not to exceed 90 days, with a defined start and end date. Temporary employees are not eligible for company health and welfare benefits and do not accrue paid time off or holiday pay.

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• Part-Time Employees – An employee who normally works less than 36 hours per week. Part-time employees are paid for time worked, normally on an hourly basis. Such employees are not eligible for company health and welfare benefits.

PROCEDURES:1.0 PAYROLL PAYMENTS

1.1 Payroll payments will be made bi-weekly via direct deposit or live check, which can be either picked up at the local office location or mailed to the employee’s residence. For those employees wishing to receive a live check rather than a direct deposit, paychecks will be distributed to the employees by their supervisor or by the payroll department.

1.2 U.S. citizen expatriate payroll is paid out of Company X’s payroll account on a bi-weekly basis. Non-U.S. citizen expatriate payroll is paid on a monthly basis rather than bi-weekly to reduce wire transfer fees. U.S. citizen expatriates are eligible for full benefits, but the benefits may differ from full-time U.S. domestic employee benefits. Specifically, medical benefits may require payment in full for services received outside the United States, and submitted claims are reimbursed at the appropriate level of medical coverage.

1.3 Company X accrues payroll on a bi-weekly basis with the payday on the Friday following the end of the period. If a holiday occurs on a Friday when a payday is due, the company will pay on the Thursday prior to the Friday instead.

2.0 TIME REPORTING

2.1 All employees are responsible for preparing and signing a weekly time sheet, which must be submitted to the payroll department no later than 3pm EST on the Monday following the end of the week. All time sheets must include the following information:

2.1.1 Employee name and number

2.1.2 Company name

2.1.3 Office number

2.1.4 Codes (class and work)

2.1.5 Hour and job summary of billable hours

2.2 The employees’ manager must approve and sign all time sheets. If an employee is absent (illness, injury, etc.) the day the time sheets are due, the employee’s manager should complete the form to his/her best ability and submit it to the payroll department.

2.3 Employees must include on their time sheet the time for days where the employee has been absent due to illness or vacation. This will ensure that such paid time off is reflected within the employees sick and vacation pay accrual record.

2.4 The respective office administrators are responsible for creating a consolidating spreadsheet that contains the location’s employee time reporting information, signing the spreadsheet, entering the time sheet information into the accounting system each Monday following the end of the week, and submitting the consolidating spreadsheet to the payroll department. All information entered into the accounting system will be transferred into the payroll system.

2.5 The corporate payroll administrator is responsible for verifying the weekly payroll data, inputting the payroll data into the payroll system, and transmitting payroll.

3.0 HOLIDAY SCHEDULE

Company X observes 10 paid holidays, which includes one corporate designated holiday. The holiday schedule is distributed to Company X employees via interoffice memo (email) before January 1 and maintained on Company X’s Intranet site. Only full-time employees are eligible for holiday pay. Temporary employees will have the day off without pay.

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Due to business necessity, if an employee is required to work on a Company X holiday, the employee may “float” the day worked for a paid day off to be used before the end of the calendar year. Prior approval from an employee’s manager is required for any Company X paid holiday that is worked. The payroll administrator and the accounting system maintain a tracking record of holiday time taken, which serves as holiday pay reconciliation to ensure that each full-time employee receives the appropriate holiday pay.

Holiday Observed on

New Year's Day xxday, January 1, 20xx

Good Friday Friday, April xx, 20xx

Memorial Day Monday, May xx, 20xx

Independence Day xxday, July 4, 20xx

Labor Day Monday, September xx, 20xx

Thanksgiving Day Thursday, November xx, 20xx

Day After Thanksgiving Friday, November xx, 20xx

Christmas Eve xxday, December 24, 20xx

Christmas Day xxday, December 25, 20xx

4.0 VACATION

Company X’s vacation calendar corresponds to Company X’s fiscal year. Generally, employees will be eligible for some vacation the first of the month after six months of employment. The period for earning, using, and maintaining vacation records will be the fiscal year, April 1 through March 31 of any given year. Vacation time can be used in minimum increments of ½ day. To take vacation, you must request and receive advance approval from your supervisor. Requests will be reviewed based on a number of factors, including business needs and staffing requirements. In addition to the vacation policy described above, persons employed by Company X in the state of California will be subject to the following vacation guidelines, in accordance with California State Law.

All full-time regular employees working in the state of California will accrue vacation at the appropriate rate in the current fiscal year after fulfilling required waiting periods. In accordance with California Law, vacation hours will carry over and accrue up to an allowed maximum cap of X hours. When an employee’s 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 of vacation compensation or accrual for the period of time the accrued vacation was at the cap.

Vacation accrual is as follows unless otherwise stated in an employment contract:

• Less than 5 years of service .X days a month

• 5 to 10 years of service X.XX days a month

• 10 or more years of service X.XX days a month

Vacation earned but not used will be paid to employees who terminate as soon as administratively possible and within federal and state guidelines. Vacation taken and not yet earned is owed to the company, and the company will withhold the appropriate amount from the final paycheck upon termination.

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5.0 ILLNESS OR INJURY (NON-OCCUPATIONAL)

All regular full time employees are eligible, after applicable eligibility period, to be paid for work missed due to illness or injury, up to the maximum of six missed days in any full fiscal year.

6.0 OVERTIME

Overtime may be required on a periodic basis of both exempt and non-exempt employees. Supervisors are responsible for authorizing any overtime and notifying employees of such extra work hours in advance if possible.

7.0 CHECK REQUESTS

7.1 Tuition Reimbursement – Employees are encouraged to participate in educational opportunities that maintain or improve the skills required in the course of their employment. Employees requesting tuition reimbursement must obtain approval from an executive, and the Human Resources department (HR). The maximum amount of reimbursement an employee can receive per calendar year is $X. The approving executive has the authority to set the reimbursement percentage associated with the reimbursement, not to exceed $X per calendar year. All reimbursements for such educational courses will be reimbursed upon receipt of the employee’s grades or other criteria established by the executive.

7.2 Lost Checks – Employees should report checks lost or otherwise missing to the payroll department immediately, so that a stop payment order may be initiated and a replacement check may be issued. Once the Company has determined that the check has not been cashed, a replacement check will be issued. Lost expense checks will not be reimbursed until the next run of expenses.

8.0 CHANGE IN EMPLOYEE PAYROLL INFORMATION

All pay adjustment information (W-4 form adjustments, employee status changes, etc.) must be submitted to HR by Monday, 8am following the end of the pay period. Failure to submit such information prior to the 8am deadline will result in the adjustments not being reflected within the employee's next paycheck.

9.0 NEW EMPLOYEES

9.1 New employees are required to fill out all paperwork contained in the new employee package and return the completed paperwork to HR. Only those employees who have completed and returned all new hire paperwork will be entered into the payroll system. Office administrators are responsible for ensuring that all new hire paperwork is complete.

9.2 HR is responsible for entering all employees information into payroll system, including deductions, withholdings, and pay rates.

9.3 Company X has approximately X standard employee titles and corresponding position descriptions, which are listed on Company X’s Intranet site. If a branch/office location believes that a new position description is necessary, the office must submit the title and corresponding position description to HR for approval. HR must approve the new employee type and determine the FLSA employee classification (exempt or non-exempt).

10.0 RESIGNATIONS AND TERMINATIONS

10.1 The office administrator or manager is responsible for notifying Corporate of an employee resignation or termination. Company X has a pre-determined email address that allows offices to submit this information via email. The email should contain the employee’s last day worked, the reason for termination, i.e. lay-off, resignation, for cause, and the accrued vacation time to be paid out. The distribution list for this email includes corporate IT,

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corporate accounting, safety, and HR. Other details of the resignation or termination should be submitted to HR in a separate email transmission, or sent with the termination paperwork.

10.2 All resigning and terminated employees are required to submit a final time sheet for determination of accrued pay and any vacation benefits. The employee’s final paycheck will be processed for the next regularly scheduled payday and subsequently mailed or picked up by the employee, unless otherwise mandated by state law.

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