How Do We Divide an Hour in Payroll?

Each individual employer determines his own payroll practices. Although how to divide an hour in payroll is at the employer's discretion, it is important to maintain a consistent practice.

Laws and Regulations

The U.S. Department of Labor only requires that employees be paid for all time that is worked. It does not regulate or mandate how hours are to be divided by the employer for payroll purposes. However, an employer cannot utilize a calculation method that results in employees not being paid for all time worked.

Incremental

The simplest way to divide an hour in payroll is by using the incremental approach. This approach results in employees being paid for 6 minute increments. Each 6 minute increment is considered 0.1 hours. For example, if an employee worked 8 hours and 48 minutes, it would be considered 8.8 hours for payroll purposes.

Rounding

The employer can also decide to round the time an employee works to the nearest 15 or 30 minutes. However, the amount of time always has to be rounded up so that an employee is paid for all of the time worked. For example, if an employee punches in at 8:23 a.m., the time in payroll would be adjusted to either 8:00 or 8:15 depending on the rounding figure that is used. If the time were to be rounded to 8:30, the employee would not be paid for the first seven minutes he worked, and the employer would then be in violation of the U.S. Department of Labor laws.

References

• Payroll-Taxes.com: Calculating Salaries for Non-Exempt Employees
• U.S. Department of Labor: Fact Sheet #22: Hours Worked Under the Fair Labor Standards Act (FLSA): U.S. Dept. of Labor

Resources

• U.S. Dept. of Labor: Home