How to Calculate Employee Hours (The Easy Way)

There are plenty of tips and tricks to show you how to calculate employee hours manually, but every business owner or HR manager knows how tedious that activity can be. Throw in the possibility for human error, and time management becomes a task no one wants to spearhead.

Many companies on the market today outsource software and tools to track employee hours. The problem is that most of these tools are designed for mid-to-large-sized companies, which leaves small business owners in the dust.

The IDEAblox Time Clock is a tool specifically designed for small businesses to help them easily manage and track work hours for teams ranging from 3 to 50 members. They have made it their goal to make work time tracking a more efficient process so you can focus on your business. Check out some of the features below.

Full-Time vs. Part-Time vs. Overtime Work Hours

When it comes to tracking employee hours, there are three main categories you typically deal with:

  • Full-time hours
  • Part-time hours
  • Overtime hours
When learning how to calculate employee hours, a business owner must take these three categories and keep them in mind during the process. That means knowing the difference between the three.


Determining who your full-time employees are is essential to running a productive and legal business. Full-time workers not only compile a different number of total working hours, but they also require different levels of compensation, benefits, and liability coverage. These fall under the employer shared responsibility provisions.

You can easily identify your full-time employees based on the number of hours they work through employee time tracking. In order to be considered full-time, an individual must record on average at least 30 worked hours per week or 130 hours per month on their timesheets.

Overtime Pay

The Fair Labor Standards Act also put measures into place that require specialized payments for overtime work hours.

Because the max hours a full-time employee can be required to work by an employer is 40 hours per week, any services performed above and beyond that time are considered overtime. When overtime hours are worked, an employer must multiply their standard rate by 1.5x.

Employee time tracking can quickly become difficult because of the change in the overtime rate. For example, an employee who works at $10/hour would normally receive $400 for a 40-hour week. However, if they work 50 hours that week, the ten extra hours are paid at a rate of $15/hour, or $150. This brings the week's gross pay to $550. These calculations make timesheets very useful.

Tools for Tracking Employee Hours

When trying to nail down how to calculate employee hours, there are many different methods you can try to track employee hours. Time management doesn't have to be difficult, and time tracking work hours can be pretty simple with these tools.

While some prefer to use an online clock to track employee hours, others prefer more old-school methods. Check out some of these helpful tools.

Pen and Paper Time Cards

Manually tracking employee hours with pen and paper may seem a little outdated to some, but it's a tried and true method that will probably never go out of style. Small businesses can especially benefit from using pen and paper time cards, as they don't have many employee hours to track.

The pen and paper manual method is easy. Employers simply need to have a sheet of paper available where employees can write their names along with their start time and finish time. By converting times to military time, an employer can quickly subtract the two numbers to find their total working time for the day.

Mechanical Time Clocks

Mechanical time clocks are used for employee time tracking and recording work hours by stamping the time and date on a paper timecard. Each employee receives a time card for the pay period, which serves as a personal timesheet.

Whenever an employee clocks in or out, they must insert their card into the time clock, punch their card, and receive a stamp. This will record the times in and out, and an employer can add up the hours worked.

Online Spreadsheets

If you're still not sure how to calculate employee hours, spreadsheets are another popular option for creating timesheets that track work hours. Employee time tracking becomes easy when you design a simple Excel sheet.

Once you open a new document, you can create rows of employee names and columns with headings such as "Time In," "Time Out," "Overtime," and more. Spreadsheets take the pen and paper method to the online world.

Time Tracking Software

These days, there are several time tracking apps and time tracking software companies that offer tools to help you track employee hours quickly and easily with the touch of a button. Companies like IDEAblox offer online time clocks for small businesses.

The question is not just simply: how to calculate employee hours; it's also: what is the best and easiest way to do so?

Many businesses, both small and large, have benefited greatly by switching to online time tracking software. These companies offer significant features that remove the need for manual tracking. In turn, this minimizes the risk of errors and eliminates the need for complex calculations.

Online clocks give each employee access to their own account where they can do things like clock in, clock out, record breaks, request time off, and track their earned vacation days. Account managers can see everyone's activity and see their hours and pay rates right away.

Steps to Take Before You Start Calculating Employee Hours

Before you choose your ideal method of time management and start to track employee hours, there are a few things you should consider. Learning how to calculate employee hours and compile work hours can be tricky, so make sure you take the following steps.

Establish How Your Business Will Record Work Hours

Above, we determined multiple ways that your business can track work hours. You have several options to choose from when it comes to employee time tracking, including:

  • Time tracking app/software
  • Pen and paper timesheets
  • Mechanical time clocks
Before you start tracking work hours, you need to select one of the above options and initiate it as the standard for your business. That way, all of your employees are using the same system.

Set a Rounding Policy

It would be very difficult and unreasonable to expect your employees to clock in and out on the exact hours they begin or complete a workday. Therefore, the best way to handle any time discrepancies is to establish a rounding policy.

Most often, businesses use the 15-minute increment rule based on the U.S. Department of Labor. This rule states that any time work hours from one to seven minutes get rounded down, while time from eight to fourteen minutes gets rounded up.

When learning how to calculate employee hours, rounding up or down on timesheets becomes key information.

Sort Work Hours into Categories if Necessary

Many industries will utilize some employees for multiple working positions. While this is a great way to manage your talent to your advantage, tracking timesheets and work hours can become much more complex when different positions offer varying pay rates.

For example, perhaps you had an employee receive a promotion to a manager position. However, when things get busy, you sometimes need her to step in and help work the bar. This change in working positions can quickly become confusing if you don't sort and establish work categories through employee time tracking.

How to Manually Calculate Employee Hours

Time management is something that every business owner handles differently. While some may choose to use a time clock app or software, others prefer to track employee hours manually. In this section, we'll show you how to calculate employee hours manually without losing track of work hours.

Step 1. Determine the start and the end time.

Step one is the simplest of the process. Determine the start time and end time for each shift worked during the pay period. This will look something like: 9:15 am to 3:45 pm.

Step 2. Convert the time to military time.

To make the mathematics of the process easier, try converting from start and end times to military time. Using our previous example, that would look like 09:15 to 15:45.

Step 3. Transform the minutes into decimals.

Once you have your military times, you can do one of two things: you can either subtract those numbers and then convert the result to decimals, or you can convert to decimals first. In our example, we will convert to decimals first.

When using decimals, our times will become 9.25 to 15.75. You can use this chart to help you with more complicated numbers.

Step 4. Subtract the start time from the end time.

To determine how many hours were worked, subtract the start time from the end time. In our case, the equation would look like this: 15.75 minus 9.25. This comes out to 6.5. So, the hours worked are 6.5 hours.

Step 5. Subtract the unpaid time taken for breaks.

Finally, subtract any unpaid time that occurred during the working period. For instance, if your employee clocked out for one hour at noon for their lunch, you would subtract one from 6.5. The final paid total hours is now 5.5 hours.

How to Manually Calculate Employee Hours if There are Two or More Positions Worked

When you have an employee who works two or more positions for you, such as a hostess who also works as a server, then the importance of categorizing work hours becomes very critical. Luckily, we can show you how to calculate employee hours when this situation occurs. Between good time management and a system to track employee hours, we can make it simple and effective.

Let's run with the example of our hostess/server. Say as a hostess, your employee makes $9/hour. However, as a server, she only makes $8/hour. She worked 40 hours this past week, but those hours consisted of two different positions.

To make things easier, you can follow this basic formula:

(Hours as a Server x Pay as a Server) + (Hours as a Hostess + Pay as a Hostess)

The above formula will give you her total pay for the week.

In order to calculate your employee's pay properly, you must have her clock in and out in separate positions. The exact parameters of this process will vary based on which tracking method you use. Her time card for one day might look like this:

Monday: 09:30 to 12:30 (Server)

01:00 to 05:00 (Hostess)

So, for the above example, your employee worked three hours as a server making $8/hour and then worked four hours as a hostess making $9/hour. Using the formula above, we can determine her pay for that day:

(3 x 8) + (4 x 9) = $60

This is the same process you would follow for a week-long pay period or longer.

Benefits of Using Time Tracking Software to Help You Calculate Employee Hours

Learning how to calculate employee hours can seem like a daunting task for a new manager or business owner, but using time tracking software can be much easier than an old-fashioned time clock.

Time tracking apps are much faster than standards methods like pen and paper or even Excel timesheets. Because they operate online, you can use them on any computer or device. Their features are all automated, so there's no complicated math involved. Additionally, online systems also take out the guesswork and the risk of human error.

Time tracking software also allows you to combine other human resource activities such as tracking paid time off, facilitating vacation requests, and calculating overtime hours. In most systems, employees can complete these actions, align with clocking in and out, with the touch of a button.


Learning how to calculate employee hours is certainly a solid skill to have. It can help your business thrive, ensure fair pay rates, and help you manage your overall business expenditures. From Excel timesheets to pen and paper standbys, there are many methods you can use.

With tons of useful features, from accurate employee hour tracking, vacation time management, and sick leave to full payroll hour reports, high security, and ease of use, IDEAblox Time Clock is the ideal tool for any small business.

Sign up now to receive a 30-day free trial. You can try the product completely risk-free. Set up your account and start using Time Clock today to see if it's the right choice for your business.

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