How To Calculate Hours Worked: Formula and Examples

By Jamie Birt

Updated May 27, 2022 | Published February 25, 2020

Updated May 27, 2022

Published February 25, 2020

Jamie Birt is a career coach with 5+ years of experience helping job seekers navigate the job search through one-to-one coaching, webinars and events. She’s motivated by the mission to help people find fulfillment and belonging in their careers.

This article has been approved by an Indeed Career Coach

Determining the hours your team members work can help you ensure they get paid the correct amount. There are many methods you can use to track and calculate hours worked. You should choose the right timekeeping method and teach your team members how to use it so all hours worked are accounted for.

In this article, we explain step-by-step how to calculate work hours and how to keep track of employee hours, including overtime.

Related: Human Resources: Definition and How It Works

How to calculate hours worked

Follow these steps to calculate worked hours:

1. Determine the start and the end time

If you're using a manual method, like a physical timesheet, you'll need to determine the times your team members clocked in and out each day of the pay period.

Example: An employee started working at 7:45 a.m. and finished at 5 p.m.

2. Convert the time to military time (24 hours)

To convert time to military time, you can add 12 to the afternoon hours, and the morning hours remain the same. You also don't need to use a.m. and p.m. since morning and night times will differ.

Example: 7:45 a.m. becomes 7:45 hours, and 5 p.m. becomes 17:00 hours.

3. Transform the minutes in decimals

To convert the minutes in decimals, you can divide the minutes by 60.

Example: 7:45 represents 7 hours and 45 minutes. Divide 45 by 60 to get 0.75. In this format, 7:45 becomes 7.75, and 17:00 becomes 17.

4. Subtract the start time from the end time

To find the total hours, subtract the time the employee clocked in from when they clocked out.

Example: 17 - 7.75 = 9.25

5. Subtract the unpaid time taken for breaks

You may need to subtract time when an employee takes an unpaid break, such as going to a doctor's appointment.

Example: The employee took a one-hour lunch break.

9.25 - 1= 8.25

The total hours worked for that day is 8.25.

With this information, you can calculate gross wage by multiplying the hours worked by the hourly wage.

How to keep track of employee hours

It's important to keep an accurate record of all the hours that your team members work so they receive pay for all of their work. It also helps to have detailed records in the event of an audit. Here are some ways to track your employee hours:

  • Handwritten timecards: Employees can write down their hours worked on a document and forward it to their employer. It's common for employees to submit a handwritten timecard once per week or every two weeks.

  • Mechanical time clock: A mechanical time clock is a device in which the employees place a paper timecard when they start and stop working. The machine marks the date and time on the timecard, and the employer can calculate worked hours with this information.

  • Electronic time clock: The electronic time clock follows the same principle as a mechanical one but is paperless. The employee presents a badge in front of the device, and it stamps a digital timecard to record date, start and end time. Some electronic time clocks can operate with a fingerprint or PIN number instead of a badge.

  • Time clock software: Employees can record their work time with clock software on computers or mobile devices. They log in to a website or application, then just click a button to clock in and out. Some software can be location-enabled to ensure employees clock in and out while at work. The software automatically calculates hours worked per pay period.

Related: Communication Skills: Definitions and Examples

What is full time?

Full time is the maximum time an employee can work in a certain period. The Fair Labor Standards Act (FLSA) is a federal regulation that sets an upper limit on the number of hours employees can work every week. The FLSA states the maximum amount that employees can work per week is 40 hours, and additional hours are considered overtime.

Employers can set different amounts for full time as long as it doesn't exceed 40 hours per week. For example, a company could consider 32 hours per week full time for its employees. Companies that have 50 employees or more are required to offer benefits, like health insurance, to their employees if they work full time.

What is part time?

Part time is any work time below the full-time limit as defined by the employer. There are no regulations about how many hours per week is part time. Employers usually set the upper limit of part-time hours at half of the full-time hours or a little more. For example, a company could set part-time hours at 20 to 25 hours per week.

A part-time position usually doesn't come with the same benefits as a full-time job. Some businesses may offer benefits to part-time employees, though they're not required to do so.

Related: The Ultimate Guide to Work-Life Balance

What is overtime?

Overtime is the hours an employee works that exceed full time. According to the Fair Labor Standards Act (FLSA), the pay rate for overtime is 1.5 times the regular hourly rate. This number is called time and a half. Employers can choose to pay more than time and a half.

For example, if the hourly wage is $10, you will multiply this number by 1.5 to get the overtime rate:

$10 x 1.5=$15

If an employee earns $10 per hour and works 43 hours a week, then the overtime amount is three hours. To calculate the pay for that week, you would calculate their pay at the standard rate for the first 40 hours, then time and a half for the overtime hours:

($10 x 40) + ($15 x 3)= $400 + $45= $445

Companies are not required to pay overtime for salaried employees, and part-time hourly employees need to exceed 40 hours per week to earn overtime pay. Some states have overtime rules that take into account hours worked over eight per day, so check with your specific state for their calculations.

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