How to Calculate a Time Card for Payroll

Hourly employees get paid... you guessed it... by the hour. So if you want to keep everyone happy, make sure time cards are calculated correctly.

Today, I'll show you basically how it works.

Hopefully you will find the following steps easy enough to get started.

Step 1: Determine the pay period

This could be weekly, bi-weekly, semi-monthly, or monthly. It totally depends on your regular payroll frequency.

Your pay period determines the start date and the end date of all workdays for which employees get paid.

Step 2: Determine start day of the workweek

All overtime is calculated based on a workweek, which is a consecutive, 7-day period.

It's up to the employer to determine what that start day is, for example Monday through Sunday. But like your pay period, be sure to keep it the same for each payroll.

Currently there are three states in the US that have daily overtime, but for simplicity, I'll stick to weekly overtime, which is Federal law.

Step 3: Calculate total hours per day

If your time clock gives you totals, great. But if not, here is how it can be done manually.

To find the number of hours between two punches, use decimals, not hours and minutes. That way you can use any kind of calculator.

For example, if someone clocks in at 8.25 (8:15), then clocks out at 13.50 (1:30), then it makes it simple.

13.5 - 8.25 = 5.25 (which means 5 hours and 15 minutes).

But be careful!

Regular hours and minutes can not be added like decimals, so don't forget to convert them. Not converting them is a common mistake.

Here is an example of converting 8:15 AM to a decimal...

((Hours x 60) + Minutes) ÷ 60 = Time in decimals

((8 x 60) + 15) ÷ 60 = 8.25

Step 4: Calculate total hours for each workweek

Now that you have calculated the hours for each day, add them as a total for each workweek.

For example:

WEEK 1 = 8 + 8 + 8 + 8 + 8 = 40
WEEK 2 = 8 + 8 + 8 + 10 + 8 = 42

Step 5: Calculate overtime for each workweek

By law, non-exempt employees (aka hourly employees) need to be paid overtime for any hours over 40 during a workweek.

So in WEEK2 above...
Regular Hours = 40
Overtime Hours = 2

Step 6: Calculate the total hours for payroll

Using our bi-weekly example above...

WEEK 1
Regular Hours = 40
Overtime Hours = 0

WEEK 2
Regular Hours = 40
Overtime Hours = 2

TOTAL PAYROLL HOURS
Regular Hours = 80
Overtime Hours = 2

Conclusion

In the steps above I've provided a simple example of calculating a time card without pay codes such as double time or PTO.

If you need that, the process is exactly the same.

However to make it even easier, use software instead. At least you know how it works.

Try Webtimeclock free for 15 days, no calculators required.