Calculating payroll time for hourly employees is a more in-depth procedure than figuring salaried employees' time. The latter is paid a set wage each pay date and generally does not have to punch a time clock. Along with collecting the time cards for hourly employees, the payroll person must calculate the hours accurately. One of the most important steps in calculating the time cards for hourly employees is changing hours and minutes into decimals.
Convert regular hours and minutes into decimals. For instance, assume the employee's hours for Monday reflect in--8 a.m., lunch in--12 p.m., lunch out--12:45 p.m., out--3:30 p.m. Use the following formula to do the conversion:
15 minutes = .25 30 minutes = .50 45 minutes = .75 60 minutes = 1 hour
Pay the employee for 6 hours and 45 minutes. To arrive at this conclusion, determine the time between 8 a.m. to 3:30 p.m., which is 7 hours and 30 minutes. Subtract 45 minutes for unpaid lunch, equalling 6 hours and 45 minutes, which is 6.75 hours based on the above formula.
Convert overtime hours into decimals. If the employee's time for Monday to Friday is in--8 a.m., lunch in--1 p.m., lunch out--2 p.m., out--7:15 p.m. Subtract one hour for unpaid lunch and pay the employee for 10 hours and 15 minutes each day, which is 10.25 hours. His total for the week is 10.25 hours x 5 days, which equals 51.25 hours. Pay 40 hours as regular hours and 11.25 as overtime hours.
Round up and down to the nearest quarter hour when calculating and converting the employee's time. For instance, suppose the employee's punches reflect in--8:12 a.m. or 7:06 a.m., round up to 8:15 a.m. and or round down to 7 a.m., respectively.