A manager’s day is filled with all types of difficult tasks. From appeasing unhappy customers to settling issues between employees to making sure the marketing goals are on track, it seems that a manager’s work is never done.
One of the most difficult tasks by far—and the one managers often put off until the very last minute—is calculating work hours. But it doesn’t have to be this way.
The experts at Sling have created a simple, efficient way to tackle the sometimes-Herculean task of processing your employees’ hours worked every week. All it takes to get started is establishing a few policies in your employee handbook, and you’ll be in business. Those policies include:
- How your business will record work hours
- The number format you’ll use
- A rounding policy
- What to do if there are errors in the time record
In this article, we’ll address each of those topics in the sections below. We’ll also show you step-by-step how to calculate the hours worked for a hypothetical employee, and how you can simplify your work life even further by streamlining the scheduling process.
All of that in one article? Sounds too good to be true. That’s Sling for you.
Before we get started on the actual process of calculating work hours, we need to address the huge purple elephant in the room that everyone wants to ignore but can’t: the law.
What Are Work Hours?
The United States Department Of Labor defines work hours as:
[The] time an employee must be on duty, on the employer premises, or at any other prescribed place of work.
The important thing to keep in mind about all this is that an employee’s time card (in whatever format the record of time worked takes) is a legal document. That means it can be used in legal proceedings as evidence.
The record of time worked can also be demanded and referenced by the IRS to ensure compliance with local, state, and federal labor laws. Because of this, it’s essential that you do your best to keep accurate records.
Full-Time Vs. Part-Time Vs. Overtime Work Hours
Work hours fall into one of three categories:
The definition of full-time work affects the other two types, so we’ll start there.
Full-Time Work Hours
In the first half of the 20th century, employers could set normal work hours at whatever number they chose. That meant that employees might be required to work 50, 60, even 70 or more hours every week as standard procedure.
In 1940, the federal government passed the Fair Labor Standards Act (FLSA) to set limits on how many hours employees could work each week.
With the FLSA in place, businesses could only require their employees to work 40 hours per week. If they worked more, the employees were entitled to extra compensation (discussed in the overtime section).
The FLSA, however, did not define full-time work. It merely set limits on how many hours an employee could work each week. Businesses were free to define full-time work however they chose.
Most opted to get as many hours as they could and used 40 as their standard. Some businesses, though, have adopted lower numbers like 36, 32, and even 30 hours per week as full-time.
There is no law on the books that says what constitutes full-time work. Only that 40 hours per week is the maximum an employee can work before they stray into overtime territory.
This provides a lot of flexibility to the employer, who can set up a work schedule that benefits both the employee and the business.
Part-Time Work Hours
As with full-time work hours, there is no legally binding number that establishes part-time hours.
Remember, the FLSA only set an upper limit on hours worked per week. It said nothing about what constituted full-time or part-time work. What it means to be a part-time employee in your business depends on how you choose to define full-time work.
If you set 40 hours as full-time, part-time is simply any number less than that. You could set it as 20 hours, 24 hours, all the way up to 39 hours.
As a general rule, managers usually hold part-time work hours at half of full-time hours (or maybe just a bit more).
So, if full-time for your business is 40 hours per week, part-time is anywhere from 20 hours to 28 hours per week.
If your part-time hours begin to rise into the mid- or even high-30s, employees begin to wonder what the difference is between the two designations.
And if your full-time employees receive benefits like insurance, vacation days, and other perks, your part-time employees who are working 32, 35, or 38 hours per week may become disgruntled that they’re doing almost as much work without the rewards.
With the establishment of the FLSA in 1940, the federal government set a limit on how many hours per week (40) employers could ask their employees to work at regular pay. Above those 40 hours, employers were now required to provide their employees with extra compensation in the form of overtime.
The standard overtime rate is 1.5 times the employee’s regular hourly wage. This number is also commonly known as “time-and-a-half.”
So if one employee makes $10 per hour, their overtime rate is $15 per hour ($10 x 1.5). If another employee makes $20 per hour, their overtime rate is $30 per hour ($20 x 1.5).
For the employee who makes $10 per hour and works 40 hours per week, their gross pay is $400 ($10 x 40). If they work any number of minutes or hours above 40 hours, you must compensate them for that work at your overtime rate.
If an employee works 40 hours and 15 minutes (40.25 hours), their gross pay would be:
Gross Pay = ($10 x 40) + ($15 x 0.25)
Gross Pay = $400 + $3.75
Gross Pay = $403.75
We’ll discuss this in more detail in the “how-to” section below.
It’s worth noting, however, that you should keep an accurate account of all hours worked — especially overtime hours. The cost of paying overtime rates on a regular basis quickly adds up and will have a significant impact on all aspects of your business, including:
Keep overtime work to a minimum whenever possible. If a full-time employee is poised to work more than 40 hours, you may want to schedule a low-hour part-time employee instead and give the full-time employee some time off.
Doing so will give the part-time employee more experience, help the full-time employee stay rested, and keep your overtime as low as possible.
Now that you understand what work hours are, how part-time and full-time play a role, and the importance of efficient record keeping, let’s delve into the step-by-step process of calculating work hours for a hypothetical employee.
How To Calculate Work Hours
For the purposes of this exercise, we’re going to create a hypothetical employee named Jane. Jane works at a restaurant where her primary responsibility is serving customers. This job pays $10 per hour. Sometimes, though, she works as a hostess when a substitute is needed. This job pays $12 per hour. You’ll see why this is important in step four.
Each of these steps requires that you set some policies and procedures to govern the way you handle the calculation of work hours. After you set those standards, it’s just a matter of using them to do some simple math to figure out each employee’s paycheck. Let’s look at the first step.
1) Establish How Your Business Will Record Work Hours
When you boil it down to the basics, there are three ways to record work hours:
- A written sign-in sheet
- A clock that prints the time on paper time cards
- A computer-based tracking system
There are numerous combinations of each method—like paper time cards for the employees and a time clock connected to a computer. You can also choose to enter time manually from a time card into a software program like Microsoft Excel.
So in our hypothetical situation, let’s say you’re using the standard time clock and paper time cards. Jane would walk into the break room, retrieve her card from the holder, and insert it into the time clock. The time clock would then record the time on the card: 8:58 a.m.
That takes us to the next important step in calculating work hours.
2) Choose A Time Format
This may seem like a strange thing to do, but the format you choose can make your life easier down the road. The two most common time formats are standard and military.
Standard time format is what you see when you look at most clocks: the time from one to twelve. Recording standard time requires the addition of “a.m.” or “p.m.” to differentiate between morning and afternoon.
Military time counts the morning hours just like the standard format (e.g., 7:24 a.m., 9:11 a.m., 11:47 a.m., etc.). But after 12:59 p.m., military time begins counting by adding an hour to twelve. For example, 1:00 p.m. in standard format would be 13:00 in military time. You’ll notice that you don’t need the “p.m.” to indicate afternoon as you do with standard time format. That’s because the other one o’clock (in the wee hours of the morning) is written 01:00.
Why is this important? Because it makes figuring out the hours worked super easy if you have to do it manually. We’ll use Jane as an example.
Let’s say Jane clocked in at 9:00 a.m. (standard format) and clocked out at 5:00 p.m. You’re going to have to do some roundabout math to calculate the hours worked, since you can’t simply subtract one number from the other in this case.
Now, let’s say that Jane clocked in at 09:00 (military format) and clocked out at 17:00. Calculating the hours worked becomes simply a matter of subtracting nine from 17 to get eight. Jane worked eight hours that day.
3) Set A Rounding Policy
Very rarely will every one of your employees clock in and out precisely on the hour. There are going to be some people early and some people late. This is where a rounding policy comes into play.
The U.S. Department of Labor recommends keeping track of hours worked in fifteen-minute increments. Employee time from one to seven minutes is rounded down, while time from eight to fourteen minutes is rounded up.
For instance, if Jane clocks in at 07:58 and clocks out at 17:02, she’s worked for eight hours and four minutes. That would round down to a straight eight hours. If Jane clocks in at 07:58 and clocks out at 17:10, she’s worked for eight hours and twelve minutes. That would round up to eight hours and fifteen minutes.
4) Sort Work Hours Into Categories If Necessary
In some industries, like the restaurant business, employees can work different jobs at different pay rates. Remember, Jane works as a server for $10 per hour but sometimes fills in as a hostess for $12 per hour.
When this occurs, it’s important to separate each block of time into the different pay rates so she can be paid accordingly. It becomes a legal issue when you fail at this step, so if it applies to your business, we recommend prioritizing sorting work into categories.
5) Tabulate Hours For The Week
One Position Worked
Now it’s time to calculate a whole week’s worth of work for your employee Jane. Here’s the time card she turns in for her server job:
Monday: 09:00 to 16:00
Tuesday: 08:45 to 17:00
Wednesday: 08:58 to 17:02
Thursday: 08:59 to 17:10
Friday: 09:00 to 17:00
At this point, it’s simply a matter of going through and tabulating the hours worked. Here’s what you would get from the above numbers.
Monday: 8 hours
Tuesday: 8.25 hours
Wednesday: 8 hours (The four extra minutes round down.)
Thursday: 8.25 hours (The eleven extra minutes round up.)
Friday: 8 hours
Adding all this up, Jane worked a total of 40.5 hours as a server. Then it’s just a matter of multiplying those hours by her server pay rate of $10 per hour…with one important caveat.
If Jane actually worked 40.5 hours, you’d also need to calculate overtime for that extra half hour over 40 hours. Here’s how it breaks down.
Regular Pay = 40 hours x $10 per hour
Regular Pay = $400
Overtime Pay = 0.5 hours x $15 per hour (time-and-a-half)
Overtime Pay = $7.50
Total Pay = Regular Pay + Overtime Pay
Total Pay = $400 + $7.50
Total Pay = $407.50
All that’s left now is simply writing or printing the check.
Two Positions Worked
In step four, we mentioned the importance of sorting hours worked into categories. That becomes important when, for example, Jane works as both a server and a hostess (jobs that pay different rates). Here’s the time card she turns in when she works both jobs:
Monday: 09:00 to 12:00 (Server)
12:00 to 16:00 (Hostess)
Tuesday: 08:45 to 11:00 (Server)
11:00 to 15:00 (Hostess)
Wednesday: 08:58 to 13:00 (Server)
13:00 to 14:00 (Hostess)
Thursday: 08:59 to 10:00 (Server)
10:00 to 17:00 (Hostess)
Friday: 09:00 to 14:00 (Server)
14:00 to 17:00 (Hostess)
At this point, you will simply tabulate the hours worked. Here’s what you would get from the above numbers:
Monday: 3 hours (Server)
4 hours (Hostess)
Tuesday: 2.25 hours (Server)
4 hours (Hostess)
Wednesday: 4 hours (Server)
1 hour (Hostess)
Thursday: 1 hour (Server)
7 hours (Hostess)
Friday: 5 hours (Server)
3 hours (Hostess)
Now, separate the hours worked into categories and add them up.
- Hours worked as a server: 3 + 2.25 + 4 + 1 + 5 = 15.25
- Hours worked as a hostess: 4 + 4 + 1 + 7 + 3 = 19
Then proceed with multiplying the hours worked by the differing pay rates. Here’s how it all works out.
Server Pay = Server Hours Worked x Server Pay
Server Pay = 15.25 hours x $10 per hour
Server Pay = $152.50
Hostess Pay = Hostess Hours Worked x Hostess Pay
Hostess Pay = 19 hours x $12 per hour
Hostess Pay = $228
Total Pay = Server Pay + Hostess Pay
Total Pay = $152.50 + $228
Total Pay = $380.50
If you’re keeping track of the total pay per position (for all employees), you would cut two separate checks for Jane—one for server pay ($152.50) and one for hostess pay ($228).
Or, if this distinction isn’t important for your records, you can just cut one check for the total pay ($380.50).
What To Do If There Are Errors In The Time Record
Sometimes employees forget to clock in or out, or there are other errors on the record. When things like this happen, it’s important to let the employee know what you’re doing with her time card and have her initial the change.
For example, let’s say Jane clocked in at 09:00 but forgot to clock out when she left. Standard policy for your business is to assume 17:00 unless otherwise indicated by a manager. You would need to let Jane know that you’re writing 17:00 on her time card and have her initial it for verification.
Simplify It With Scheduling
The Sling app is designed specifically for streamlining the scheduling process, so all of its tools are dedicated to that task. Sling can also help you avoid conflicts by providing:
- Time-off requests.
- Notifications of overlapping shifts and double-bookings.
Sling even provides features that help you distribute your schedule efficiently, keep it up to date, find substitutes, and communicate with your employees. It really is the total solution for bringing your staff together, keeping everyone informed, and building a more productive team.
To learn more about how the right scheduling tool can simplify your work life, check out GetSling.com.