Calculating hourly rates for salary

If you have salary employees, payroll is still calculated by the hour.

Sure, they may have an annual salary, but when it comes to payday, their check is divided by whatever your pay period is.

In the US, it's based on the 40 hour workweek.

Here is how...

Multiply 52 weeks per year times 40 to get 2080 hours per year.

Then divide the annual salary by 2080 to get their hourly rate.

For example $80,000/2080 = $38.4615 per hour

Notice the four decimal places? Yes, do that to keep it accurate.

Calculate gross pay based on your regular pay period...

• Weekly: 40 hours x their hourly rate
• Bi-Weekly: 80 hours x their hourly rate
• Semi-Monthly: 86.67 hours x their hourly rate
• Monthly: 173.33 hours x their hourly rate

Don't worry if math is not your strong point, payroll software will calculate this for you.

It's good to know how it works.