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Determine the hourly rate of salaried employees

Learn how to calculate the hourly pay rate of a salaried employee.

Salaried employees are employees who get paid with a fixed amount of money or compensation. But did you know that salaried employees have hourly pay rates too?

Determining the hourly pay rate of a salaried employee can help you prorate their salary. For example, your full-time salaried employee who usually works 40 hours/week, only worked 32 hours for a specific week. If so, how much will be his salary? Although our payroll service automatically assists you with these calculations, you might wonder how they came up with that amount.

This article shows you how to manually calculate the hourly pay rate of a salaried employee using this sample pay info:

  • Pay frequency: Biweekly (26 pay periods)
  • Total weeks in a year: 52
  • Annual hours: 2080 (40 hours/week x total weeks in a year)
  • Salary amount: $1,200/period

Calculate the hourly rate of a full time employee  who works 40 hours/week

  1. Get the annual salary. If you already know the annual salary, skip to the next step.
    Annual salary = salary amount x pay frequency
    Ex:

    $1,200 x 26 = $31,200

  2. Compute the hourly rate.
    Hourly rate = annual salary / annual hours
    Ex:

    $31,200 / 2,080 = $15.00

For this example, the hourly rate is $15.

Calculate the hourly rate of a salaried employee  who works less than 40 hours/week

  1. Get the annual salary
    Annual salary = salary amount x pay frequency
    Ex:

    $1, 200 x 26 pay periods = $31,200

  2. Compute the total annual hours
    Annual hours = number of hours the employee works per week x number of weeks per year
    Ex:

    24 x 52 = 1,248

  3. Compute the hourly rate
    Hourly rate = annual salary / total annual hours.
    Ex:

    $31,200 / 1,248 = $25.00

For this example, the hourly rate is $25.

For other questions, see Common questions about payroll and salaried employee FAQs.

 

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