Calculating hours worked ensures that employees are paid correctly for their time, including regular hours and overtime. This helps avoid underpayment or overpayment, which can impact employee satisfaction and compliance with labor laws.
Computing hours worked also allows businesses to track labor costs accurately. It helps in budgeting, cost analysis, and resource allocation, enabling businesses to optimize their workforce and control expenses.
You can use time tracking apps, time card calculators or timesheets. Yet, there are some simple formulas that can help you arrive to the number of hours worked daily, weekly or monthly.
Take the following steps to calculate the hours worked. These steps will also help you on how to calculate the time cards or timesheet manually:
This step accurately notes when an employee begins and ends their work shift. It serves as the foundation for calculating total hours worked.
Converting to military time (24-hour format) is helpful for consistency and clarity, mainly when dealing with international teams or systems that require this format.
To convert to military time add 12 to the end time (afternoon hours) and keep the start time (morning hours) unchanged.
Converting minutes to decimal format simplifies calculations and allows for easier aggregation and analysis of time data.
The formula to convert minutes to decimal is to divide the minutes by 60, as one hour has 60 minutes. Then add the result to the hours. This operation needs to be done for both the start and end time of the employee.
To calculate total work hours, subtract the time the person clocked in from when they clocked out.
Tip: you can use a hours calculator to help you with these calculations.
Breaks and lunches are typically unpaid and must be subtracted from the total hours worked. Ensuring accurate break time deduction helps calculate net hours worked.
Having mastered calculating daily working hours in the previous steps, you're now ready to tackle the next task. Your employer may request a weekly, bi-weekly, semi-monthly, or monthly report on your hours worked, depending on your pay period. To calculate the total hours worked per week or period, add up the daily totals following the steps mentioned above. You might also use a work hours calculator to calculate the weekly totals in decimal in a breeze.
Tip: With this information, you may determine gross wage by multiplying the hours worked by the hourly rate. You can also determine the annual salary with the weekly hours worked and hourly wage.
Calculating work hours manually has some benefits, such as not requiring any special tools or software. It can also provide a good understanding of the time and effort put into work. However, manual calculations can be time-consuming, prone to errors, and may not provide advanced analytics or insights. Additionally, keeping track of complex work schedules manually can become cumbersome.
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Overall, while manual calculations can work for small or simple setups, they can become impractical for larger or more complex operations.
There are various options for keeping track of employee hours. Let's explore the following options:
Popular spreadsheet tools, such as Microsoft Excel or Google Sheets, allow employees to input their hours worked and related information electronically.
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Time-tracking apps help individuals and businesses monitor and record time spent on various tasks and projects.
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Electronic time clocks, also known as punch clocks, are physical tools that workers use to "clock in" and "clock out" by using a card, key fob, or biometric identification.
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Time clock software is a digital solution that allows employees to log their hours electronically using computers, mobile devices, or web-based applications.
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Handwritten timecards involve employees manually recording their start and end times on physical cards or sheets of paper. They can note their breaks, lunch hours, and other relevant information.
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The choice of time tracking method depends on the organization's size, specific needs, budget, and desired level of automation and accuracy. Businesses should consider the number of employees, remote work requirements, reporting needs, and integration capabilities when selecting the most suitable option for tracking employee hours.
Overtime is the term used to describe the extra hours that an employee works beyond their regular work hours.
Under the Fair Labor Standards Act (FLSA), employers are required to pay 1.5 times the regular hourly rate for overtime work.
This means that if employees make $12 per hour and work overtime, they will earn $18 per hour for every hour worked over their regular hours.
For instance, if an employee works 45 hours a week, the first 40 hours are paid at the regular rate of $12 per hour, and the remaining 5 hours are paid at the overtime rate of $18 per hour.
Therefore, the employee's total pay for the week will be calculated as follows: ($12 x 40) + ($18 x 5) = $480 + $90 = $570.
Remember that businesses are not obligated to pay salaried employees overtime; part-time hourly employees must work more than 40 hours per week to obtain extra pay.
It is important to note that some states have their own overtime rules, which may differ from the FLSA guidelines. So, it is always advisable to check with your state's labor office to know the specific overtime regulations applicable to your work. We have some answers about the advantages and disadvantages of overtime.
To calculate hours worked in Excel, you can use formulas and functions to perform the necessary calculations. We have put an step-by-step guide that covers these aspects in-detail, and with editable template that you can download free of charge.
Optional steps:
Go to our guide How to calculate hours worked in Excel.
In conclusion, calculating hours worked is essential for ensuring accurate payment of employees and effective management of labor costs. By following the steps outlined in this guide, such as recording start and end times, converting to military time, converting minutes to decimal format, and subtracting breaks, businesses can accurately track employee hours worked. Additionally, there are various options for tracking time, including handwritten timecards, spreadsheets, electronic time clocks, and time clock software, each with its own pros and cons. It's important for businesses to choose a method that best suits their tracking needs, considering factors such as accuracy, scalability, and ease of use. By implementing an effective time tracking system, businesses can streamline their payroll processes, ensure compliance with labor laws, and effectively manage labor costs.