How to Figure Payroll Hours

Verify payroll hours to ensure accurate paychecks.

An inaccurate payroll can result in incorrect paychecks. Many companies use a time clock to help track employees' hours and to simplify time computation. The payroll person must pay the employee according to what is on the timecard or according to swipes reflected in the system. An employer might decide on a different timekeeping system, such as a spreadsheet, or having the employee complete a time sheet. The timekeeping system should provide employees' work time, which the payroll person uses to figure the total hours.

Things You'll Need

• Clock
• Calculator

Instructions

1. Convert minutes to decimals. The employee might record his hours exactly as he worked them, such as 4 hours and 45 minutes. Use the following table to convert the minutes into decimals:

   15 minutes = .25
   30 minutes = .50
   45 minutes = .75
   60 minutes = 1 hour

   Consequently, 4 hours and 45 minutes is 4.45 hours.

2. Tally regular hours worked. Regular hours are paid at the employee's normal pay rate. For instance, say her time sheet shows the following for Monday to Thursday: in---7 a.m.; lunch---30 minutes; and out---2 p.m. Subtract 30 minutes for unpaid lunch. Pay her 6 ½ hours for each day (6.50 hours x 4 days = 26 hours for the week). Generally, hours worked up to 40 should be paid at the employee's regular pay rate. Vacation, holiday, sick and personal time should also be paid at the employee's normal pay rate.

3. Calculate overtime. Hourly workers typically qualify for overtime pay if they work more than 40 hours in a given week. For instance, the employee's time sheet shows the following for Monday to Friday: in---6 a.m., lunch---1 hour; out 6:15 p.m.; subtract one hour for unpaid lunch. Calculate as follows: 11.25 hours x 5 days = 56.25 hours. Pay him 40 hours at his regular pay rate and the remaining 16.25 at his overtime rate (1.5 times his normal rate).

4. Figure double-time hours. If the employer elects to pay employees double-time for night or holiday hours, he should calculate it at twice the employee's normal pay rate. For instance, say the employee worked six hours on New Year's Day and his pay rate is $11 per hour, calculate as follows: 6 hours x $22 ($11 x 2) = $132 (double-time pay).

5. Prorate salary pay, if applicable. Salaried employees are paid a set wage every pay date; therefore, their pay tends to remain the same, unless the employer needs to prorate it. Reasons for prorating include new hire, termination or overpayment deduction.

   Prorate the salaried employee's pay based on his daily rate. For example, based on a biweekly pay cycle, use the following example: $60,000 (annual salary) / 26 pay periods = $2307.69 (biweekly pay) / 10 days = $230.77 (daily pay).

References

• Recordkeeping Requirements under the Fair Labor Standards Act (FLSA)
• Overtime Pay