Let’s be honest, calculating employee’s hours is a difficult task depending on how many employees you manage. If done incorrectly, it can cost you thousands of dollars annually. This article will help you avoid the common mistakes that come with calculating employee hours.
What Exactly Are Employee Worked Hours?
According to the United States Department of Labor, work hours are defined as:
“[The] time an employee must be on duty, on the premises, or at any other prescribed place of work.”
There are three types of employee worked hours:
The definition of full-time working hours can be tricky because it may be different for each business. The maximum number of hours that is considered to be full-time will affect both part-time and overtime.
The Fair Labor Standards Act, also known as FLSA, establishes the maximum hours an employee can work before they go into overtime. They currently have set the full-time limit to 40 hours per week. However, some businesses choose to set their maximum full-time hours lower than 40 hours.
If you have set full-time at 40 hours per week, part-time is just anything less than that. You can set it as low as 16 hours or as high as 39 hours. Although it’s common for companies to set their part-time hours anywhere between 20-28 hours.
Employees work for their regular pay when they work within the designated full-time work hours. When employees work past their maximum full-time hours a.k.a. overtime, employers are required to compensate them more than their regular pay.
Typically, the standard overtime rate is 1.5 times the employee’s hourly pay rate, or time-and-a-half. Overtime payroll must be added to the employee’s gross pay.
For example: If an employee’s regular hourly pay rate is $10, their overtime rate would be $15.
- $10 x 1.5 = $15
How Do I Keep Track of My Employee Hours?
There are a variety of options out there to keep track of your employee’s hours. The method that works best all depends on the number of employees that you have and what your company does. Here are 3 ways you can keep track of employee hours:
1. Pen and Paper
Using the pen and paper method of tracking hours is considered ‘old school’. The pen and paper method is just what it is- tracking time using a pen and a piece of paper or time card.
2. Electronic Time Clocks
An electric time clock is a device that records employees’ hours using a working hours log, password, and/or handprint. Some even use facial recognition! These hours are often recorded on a paper time card.
3. Automatic Time Tracking Software
This method is probably the easiest and most efficient way to keep track of your employee hours. There are many companies that specifically provide the services you need to keep track of hours. ClockShark does just that and even more!
ClockShark is a powerful and easy-to-use online service that tracks both your employee’s location and their hours. This product is built specifically for construction and field service companies and has everything you need to track your employee hours.
How Do You Calculate Payroll Hours?
Tracking employee hours is one thing, but payroll is a whole other ball game. As we stated at the beginning of this article, simply calculating payroll hours incorrectly can cost you thousands of dollars. There are a number of ways to calculate employee hours. Below we have explained the 2 steps we believe will get you on the right track to calculating payroll.
1. Convert Time to Military Hours
Unlike the standard one to twelve “a.m.” and “p.m.” time, military time consists of a 24-hour clock. Converting time to military time makes it easier for you to calculate payroll. So what does military time look like and how do you convert standard time to military time?
Let me give you a simplified example:
- John starts his workday at 8:30 a.m., this is 08:30 hours in military time.
- John ends his workday day at 4:30 p.m., this is 16:30 hours in military time.
- When it comes time to calculate John’s hours worked for payroll, you must calculate the difference using military time.
- 16.30 – 08.30 = 8
- John worked 8 hours during that specific workday.
2. Convert Hours to Decimal Value
After you have converted all employee times to military hours, the next step is to convert the hours into decimal values. Doing this will allows you to easily determine gross pay for your employees.
Below, we have provided a table that converts minutes into decimals.
So, how do you use this to calculate payroll? Here’s an example:
- Carlos clocks in for his workday at 7:27 a.m., this is 07:27 hours in military time.
- Carlos clocks out of his workday at 2:49 p.m., this is 14:49 hours in military time.
- When calculating the amount of hours he worked for the day, remember we must find the difference using the military time.
- 14.49 – 07.27 = 7.22
- Carlos worked 7 hours and 22 minutes for that specific workday.
- Now, we must convert the 7.22 hours into decimal hours
- When looking at the table provided above, we can conclude that Carlos worked 7.37 decimal hours.
- Using that 7.37 decimal hours, we can now accurately calculate payroll:
- If Carlos gets paid $20.00 per hour, we simply multiply that by 7.37
- 20 x 7.37 = 147.40
- Carlos got paid $147.40 for that specific workday.
- If Carlos gets paid $20.00 per hour, we simply multiply that by 7.37
Now after looking at that example, you’re probably thinking that it’s such a long and tedious process and that there has to be an easier way. Well, good news, there is- ClockShark!
Benefits of ClockShark as a Time Clock Software for Tracking Employee Hours
ClockShark has a variety of resources available that will help you track employee hours and calculate payroll. Here are a few of the many resources we provide:
- Need a faster and more efficient way to calculate employee worked hours? With ClockShark’s Timesheet Calculator, you put your employees ‘ worked hours and pay rate, and we will calculate hours worked, their pay, and even overtime!
- In a previous blog post titled, “Employee Timesheet Template – Free Download for Excel”, we have provided a downloadable timesheet template for your use. This free resource is a handy tool to organize and easily track employee hours. Don’t know how to use a spreadsheet as a timesheet? Don’t worry, we have a video explaining how to use it.
- With integrations such as QuickBooks and ADP, available on our paid subscriptions, the pain that comes with payroll is put at ease. Calculating payroll takes seconds with our helpful and easy-to-use integrations.
- When calculating employee hours, you have to face the issue of ‘time rounding’. Time rounding is the practice of rounding employee time to the nearest increment. For example, if an employee clocks out at 4:56 p.m., you round it up to 5:00 p.m. for the purpose of payroll. More often than not, when you do this, it causes money to go down the drain. Luckily, with ClockShark’s True Cost Calculator, you can see how much money you’re losing when rounding time.
- The stress of inaccurate employee hours is solved with ClockShark! Employees can track, and even edit their work hours from any smart device using the ClockShark app. This app is available on iPhone and Android.
ClockShark strives to make the lives of our customers easier. Make use of our free resources to get quicker and accurate payroll for your employees!
One Final Note…
Calculating employee worked hours can be tough, but it doesn’t have to be when you have the right resources. ClockShark offers resources available for you for free to utilize when it comes to calculating payroll. It’s time to start calculating employee hours pain-free.
Tell us in the comments, how do you calculate employee hours?