How to Calculate Payroll Time
Payroll processing is a critical task because employees expect their paychecks to be accurate and timely. To ensure employees are paid correctly, the payroll staff must calculate the payroll hours for the current payroll. To arrive at the proper calculations, a number of steps are necessary.
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Instructions
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Gather timesheets for hourly employees. Hourly employees are paid according to the amount of the hours they work during the pay period. If you have a large hourly payroll you will receive an abundance of timesheets every week to be paid according to your pay schedule (for example, weekly, biweekly or semi-monthly). To simplify the calculation process, separate the timesheets in stacks, for example, by department. If you have a small hourly payroll, generate one stack.
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Ensure all timesheet columns are properly completed. Regular hours should be listed under the regular column; overtime, vacation and personal days should be stated under their respective columns.
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Add up the timesheets by figuring the employee's regular hours worked for the day and the week. Example: Monday's time reflects: in---9:10 a.m.; lunch---1 p.m. to 2 p.m.; out---6:10 p.m. Pay the employee for eight hours for that day because 9:10 a.m. to 6:10 p.m. minus one hour for unpaid lunch is eight hours. Note that the employee's time should always be rounded up to the nearest quarter (e.g., 9:10 a.m. equals 9:15 a.m.). Ensure that each day's column is totaled and correct, even if the employee or his supervisor has already done the calculation.
Calculate overtime pay. Example: in---9:15 a.m.; lunch---1 p.m. to 1:30 p.m.; out---9:15 p.m. equals eleven and a half hours. The employee would receive eight hours pay at his regular pay rate and three and a half hours of overtime pay (11.50 -- 8 = 3.50).
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Convert military time to regular time. Some time clocks reflect employees' punches as military time rather than regular time. Example: in---800 a.m.; lunch 1200 to 1300; out---1700 p.m. means in---8 a.m.; lunch 12 p.m. to 1 p.m.; out---5 p.m.
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Keep salaried employees pay the same each pay date unless there has been a pay adjustment such as a pay increase---salaried employees are paid a set wage each pay date. Sometimes you may have to prorate a salaried employee's paycheck if an employee is hired or terminated in the middle of a pay period.
To prorate a salaried employee's time, determine her daily rate. Example: Salary = $50,000; pay frequency = biweekly. Divide salary by twenty-six biweekly pay periods and divide total by 10 days ($50,000 / 26 = $1923.08 / 10 = $192.31 = daily rate).
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