Learn how to calculate the hourly pay rate of a salaried employee.
Salaried employees are employees who get paid 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 and may not have paid time off to cover the hours missed. Although you can override an employee’s salary in QuickBooks, you might wonder how we came up with that amount.
Sample pay info
Let’s manually calculate the hourly pay rate of a salaried employee, and how much employees get if they worked less than 40hrs/week in a specific period using this 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
Step 1: Calculate the hourly rate of a full time employee who works 40 hours/week
- 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 - 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.
Step 2: Calculate the employee’s salary amount who worked less than 40hrs/week.
Now that we know how much the employee’s hourly rate is, multiply the hourly rate and hours worked for that specific period. In this example, your employee worked 64 hours in a biweekly pay period.
64 hrs x $15 = $960
Instead of getting a regular salary of $1,200, your employee gets $960 for this period.