The standard payroll hours formula
Almost every U.S. payroll system uses the same core formula:
Payroll hours = (End time − Start time) − Unpaid breaks
The result is then converted to decimal hours and multiplied by the hourly rate to get gross pay. Hours over the weekly threshold (typically 40) are paid at the overtime rate.
Step-by-step calculation
- 1
Convert clock times to minutes
Convert each clock time to total minutes since midnight. 9:15 AM is 9×60 + 15 = 555 minutes. 5:45 PM is 17×60 + 45 = 1,065 minutes. - 2
Subtract start from end
1,065 − 555 = 510 minutes total elapsed. If the shift crosses midnight, add 1,440 minutes to the end time first. - 3
Deduct unpaid breaks
If the employee took a 30-minute unpaid lunch, subtract 30 minutes: 510 − 30 = 480 paid minutes. - 4
Convert to decimal hours
Divide by 60: 480 ÷ 60 = 8.00 decimal hours. For a 7h 15m shift, the answer would be 7.25. - 5
Apply the hourly rate
Multiply decimal hours by the hourly rate: 8.00 × $22 = $176.00 gross pay for that shift. - 6
Check for overtime weekly
Total all daily payroll hours for the workweek. Hours above 40 are paid at 1.5× the regular rate (under federal FLSA rules).
Worked example: a typical 5-day workweek
An employee worked the following hours, with a 30-minute unpaid lunch each day:
| Day | Start | End | Paid hours | Decimal |
|---|---|---|---|---|
| Mon | 8:00 AM | 5:00 PM | 8h 30m | 8.50 |
| Tue | 8:00 AM | 5:30 PM | 9h 00m | 9.00 |
| Wed | 8:00 AM | 4:30 PM | 8h 00m | 8.00 |
| Thu | 8:00 AM | 6:00 PM | 9h 30m | 9.50 |
| Fri | 8:00 AM | 4:00 PM | 7h 30m | 7.50 |
| Total | 42h 30m | 42.50 |
Total weekly hours: 42.50. Of those, 40.00 are regular and 2.50 are overtime. At $22/hour with 1.5× overtime: 40 × $22 = $880 regular + 2.5 × $33 = $82.50 overtime = $962.50 gross pay for the week.
Common edge cases
Overnight shifts
If a shift starts at 10:00 PM Monday and ends at 6:00 AM Tuesday, treat the end time as 30:00 (6:00 + 24:00) when subtracting. The result is 8 hours.
Time clock rounding
Some employers round clock punches to the nearest 5, 6, 10, or 15 minutes. Under the FLSA, rounding must be neutral and not consistently underpay employees over time.
Paid vs unpaid breaks
Short rest breaks (typically under 20 minutes) are usually paid. Meal breaks of 30 minutes or more are usually unpaid if the employee is fully relieved of duties.
Why payroll hours need their own definition
Payroll hours sit between two related ideas: total clocked time and hours actually worked. Total clocked time can include unpaid breaks. Hours actually worked excludes unpaid breaks but is the FLSA basis for overtime. Payroll hours include every paid line on a pay stub, including paid leave that does not count toward overtime. Each of those three definitions appears on real pay stubs, often at the same time, which is why the term "payroll hours" exists. It is the rolled-up total of every paid hour across every category in a pay period.
Step-by-step
- List the days in the pay period.
- For each day, record clock-in, clock-out, and unpaid break minutes.
- Compute net paid time per day: (clock-out minus clock-in) minus unpaid breaks.
- Sum the daily totals into a weekly total. Repeat for each workweek in the pay period.
- Add any paid leave hours (PTO, sick, holiday, jury duty, bereavement) for each workweek.
- Apply your overtime rule to hours actually worked, not to paid leave.
- Sum every pay line to get total payroll hours for the pay period.
Worked example
An employee on a biweekly pay period works 41 hours in week one and 36 hours in week two with 8 hours of paid sick leave. Hourly rate $24.
- Week one: 40 regular + 1 overtime. Pay: 40 × $24 + 1 × $36 = $996.
- Week two: 36 regular + 8 sick. Pay: 36 × $24 + 8 × $24 = $1,056.
- Pay period payroll hours: 40 + 1 + 36 + 8 = 85 paid hours.
- Pay period gross: $2,052.
Common mistakes
- Adding paid leave to hours worked for overtime. PTO does not push you into overtime under FLSA.
- Rounding twice. Round the punch or the daily total once, not both.
- Using period totals for overtime instead of weekly totals. Overtime is per workweek even on biweekly payroll.
Run the same numbers through the Payroll Hours Calculator and the Biweekly Time Card Calculator to verify both the weekly split and the period total.
Important note
Payroll hour rules vary by employer, state, workplace policy, and union contract. Always confirm final payroll math with your employer, payroll provider, or HR department. The calculators on this site provide estimates, not official payroll output.