The second method is good if the employee consistently works overtime hours. Using this second method, the employee’s hourly wage is $12.63. This gives you the number of regular hours that is equivalent to the wages of the overtime hours.ĭivide the employee’s weekly salary by the number of hours. In this case, the employee works five overtime hours each week (45 – 40 = 5 hours). Next, figure out how many overtime hours the employee works each week. To start, find the employee’s weekly salary. Let’s say your employee earns a salary of $31,200 per year and works an average of 45 hours per week. (Salary ÷ 52) ÷ ((Overtime Hours × 1.5) + 40) = Hourly Rate Here is the basic equation for this method: You can also talk to the employee about how many hours they think they work. If you do not have time records, use your best knowledge of how much the employee typically works each week. If you previously had nonexempt salaried employees track their time, use those records to calculate an average. With the second method, you’ll learn how to convert salary to hourly based on the average hours the employee works each week.įirst, you need to know the average number of hours the employee works each week. Get My Free Guide! Converting salary-to-hourly: Method 2 In this example, the employee would earn $5,850 more per year. When you use this hourly wage calculation for salary employees, employees who work a lot of overtime will earn more as nonexempt hourly employees than they did when they were exempt salary employees. $112.50 + $600 = $712.50 total weekly wagesĪssuming that the employee consistently works 45 hours per week, you can multiply the total weekly rate by the number of weeks in a year to find the total yearly earnings. $22.50 × 5 overtime hours = $112.50 weekly overtime wagesĪdd together the regular and overtime wages for the week. Multiply the overtime rate of pay by the weekly overtime rate. The overtime rate is one and a half times the regular rate of pay. Next, calculate the overtime rate of pay. What if you begin paying the employee the $15 per hour rate, but the employee actually works 45 hours per week?įirst, calculate the employee’s earnings for the regular hours they worked during the week.Ĥ0 hours × $15 = $600 regular weekly earnings In the example above, the employee’s annual salary was $31,200 based on a standard 40-hour workweek. But if the employee does work a lot of overtime, you might pay a lot of overtime wages. This first method is great to use if the employee does not work much overtime. In this example, the employee’s hourly rate is $15. Here is the basic salary-to-hourly formula for this method:įirst, divide the employee’s annual salary by 52 weeks (the number of weeks in a year). If a standard workweek at your business is less than 40 hours, use that number instead of 40 in the equation. With this salary-to-hourly conversion, you will calculate the hourly rate based on a standard 40-hour workweek. Both methods come with a downfall, which is explained in each section. However, don’t automatically use the first formula to avoid doing extra math. The second formula involves more calculations. The first salary to hourly formula is shorter and easier to calculate. How to convert salary to hourlyīelow are two hourly wage calculation methods for salary employees. Regardless of your reason, we’ve got the formulas you need to convert salary to hourly wages below. Or, you might need to know how to calculate overtime for salaried employees. So, when would you need to convert a salary to hourly wages? You may want to know how an employee’s salary compares to employees who receive hourly wages. And if you want to know how to convert salary to hourly rate for employees, it’s time to whip out those calculators. Sometimes, being an employer feels like you’re doing nonstop math.
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