When the individual will receive all the scheduled payments in the month and all the payments cover a full payment period, estimate the monthly income by using the normal or average payment amount. Payments received once a month do not need to be converted. If payments are made more than once a month, multiply by a conversion factor to get a monthly amount:
By 2 if the payment is for a half month (i.e., paid twice a month)
By 2.15 if the payment is for a period of two weeks (i.e., paid every other week)
By 4.3 if the payment is for a period of one week (i.e., paid weekly)
Confirm pay period start and end dates and pay dates to ensure the correct conversion factor is used. The distinction between twice a month and every two weeks may be missed if the ET simply asks the payroll clerk how often an employee is paid.
If the payment amounts do not vary, multiply the normal payment received each pay day by the appropriate conversion number based on the frequency of payment.
Example: Payment Amounts Do Not Vary
Rachel is paid twice a month, on the 4th and the 20th. Her salary is $1000 a pay period. To calculate her monthly income, $1000 is multiplied by 2 ($1000 x 2 = $2000).
If the payment amounts vary, calculate an average payment first, and then multiply it by the appropriate conversion number based on the frequency of payments in the month.
Example: Payment Amounts Vary
Val is paid every other Saturday. Her average pay is $428. To calculate her monthly income based on payments every two weeks, $428 is multiplied by 2.15 ($428 x 2.15 = $ 920.20).
Notes:
Two pay days in the month that are normally on the same dates, such as on the 5th and 20th, indicate the individual is paid twice a month.
Pay days that are 14 days apart and normally on the same day of the week, such as every other Friday, indicate the individual is paid every other week (bi-weekly).
Pay days that are 7 days apart and normally on the same day of the week, such as every Monday, indicate the individual is paid weekly.
Pay dates may vary when the normal pay date falls on a holiday or weekend.
Some individuals have unusual work schedules, like working one week on and one week off. In these situations when there is no pay history, the ET will calculate a monthly estimate of income by determining the amount of income that will be received during a time period and converting this amount into a monthly amount.
Example #1: Unusual Work Schedule
Erin works three weeks on and one week off. She just started working and the employer statement indicates she’ll work 10 hour shifts, seven days a week, and will be paid $12 an hour for the first 40 hours per week, and $18 an hour for the remaining hours.
The ET calculates she’ll work 120 hours at $12 an hour ($1440) and 90 hours at $18 an hour ($1620) during this 21-day period, for a total amount of $3060. She’ll earn no money during the seven days she has off, so for the four-week period, she’ll earn $3060. The worker divides this amount by 4 to get a weekly average ($3060 divided by 4 = $765), and multiplies this amount by 4.3 to get a monthly estimate of income ($765 times 4.3 = $3289.50).
Example #2: Unusual Work Schedule
Pat’s work schedule is one week on and one week off. He normally works 12-hour shifts for seven days, and gets paid $10 an hour regular time (40 hours times $10 = $400) plus $15 an hour overtime (44 hours times $15 = $660) for a total of $1060 per week. Since he works one week on and one week off, this $1060 represents two weeks of employment. The ET multiplies this by 2.15 to get a monthly estimate of income ($2279).
Six months later, Pat submits a renewal form and provides his pay stubs for the pay periods ending May 9 ($1030), May 23 ($1280), and June 6 ($1090). Since these represent two-week pay periods (one week on and one week off), and worker totals them ($3400), divides this amount by 3 to get an average payment ($1133.33 and multiplies this average two-week payment by 2.15 to get a monthly estimate of income ($2436.65).
Full payment periods include pay periods when there is a temporary decrease in the payment amount due to unpaid leave or work schedule changes, or a one-week gap in unemployment insurance benefits. These situations result in a change in the amount of the scheduled payment, but the payment still covers a full payment period. In these situations, the ET calculates an average payment just for that month to estimate the month’s income. Another average payment is calculated to estimate income for subsequent months in which the payment amounts return to normal.
Example: Temporary Decrease in Earnings
Carolyn works a 40-hour per week job, but the amounts of her last three checks vary significantly due to leave without pay she took for a family emergency. She does not expect to miss any more work. She is paid every two weeks and received $400 gross (40 hours) on August 3, $600 (60 hours) on August 17, and expects a normal pay check of $800 (80 hours) on August 31. Since August income is significantly lower than normal, the ET must do a separate budget for this one month. For August the ET totals the three payments received in August and divides the amount by three to get an average payment amount ($400 + $600 + $800 = $1800/3 = $600). Carolyn is paid bi-weekly (every other week). The ET multiplies this average payment amount by 2.15 to get an estimated monthly income amount for August ($600 x 2.15 = $1290). Since low paychecks are not expected to continue, the ET anticipates $800 every two weeks and recalculates an estimated monthly income of $1720 for September and beyond. ($800 x 2.15 = $1720).
Example: Temporary Decrease in Unemployment Benefits
Bob is receiving unemployment insurance benefits (UIB) of $210 a week, which is paid every two weeks in the amount of $420. He will receive UIB payments on the 2nd, 16th, and 30th of November. However, he did not claim one week of benefits so one of these payments is for $210. He expects to claim every week of benefits in the future. Since November income is lower than normal, the ET must do a separate budget for this one month. The ET totals the three payments in November and divides the amount by three to get an average payment amount ($420 + $210 + $420 = $1050/3 = $350. Since the payments are bi-weekly, the ET multiplies this average payment amount by 2.15 to get an estimated monthly income amount for November ($350 x 2.15 = $752.50). Since the lower UIB payment is not expected to continue, the ET anticipates $420 every two weeks for December and beyond and recalculates an estimated monthly income of $ 903 ($420 x 2.15 = $ 903).
Note:
If an individual is paid once a month and the amount varies, such as child support payments, calculate an average monthly amount to use in estimating total monthly income.
If the ET and client anticipate that the lower payment is only for one month, the caseworker recalculates the income using the amount normally received to determine income for subsequent months.
All anticipated changes in income reported and verified at the time of application, renewal, or during the certification period must be considered when calculating the estimate of income. This may require the ET to calculate multiple budgets for subsequent months until the income stabilizes.
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