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On December 1st, any salaried employee making less than $47,476 per year will now be eligible for overtime. This may not mean an increase in total wages; it could just mean a conversion from an annual salary to an hourly rate.

Here’s some guidance and an easy calculator to help you convert an existing salary into an hourly rate.

How to calculate an hourly rate from a salary?

First calculate the approximate number of hours that an employee is working every week. Now break this down between regular and overtime hours. For example, if someone is working 50 hours a week, this could be 40 hours of regular time and 10 hours of overtime.

Now you can divide the weekly average salary by these hours. You may want to exclude weeks that they do not work to get a more accurate figure. For example, if you give two weeks of unpaid vacation, you may want to base your weekly salary upon 50 weeks instead of 52.

Here’s an example. Let’s say you’ve got a manager earning $47,476 today, and they generally work 40 hours per week. This is equivalent to an hourly rate of $23.74.


How to prepare for the change

There are a few things to keep in mind when you make the change:

First, the new rate must be higher than minimum wage for your jurisdiction. If the effective hourly rate ends up lower, you’ll need to either adjust their hours or increase your total labor budget.

Second, you’ll also need to start complying with state meal break and rest break requirements. You can use the free timesheets from Homebase to automatically track these breaks and calculate overtime, eliminating work.


Salary to hourly rate calculator

Simply plug in an annual salary, the number of weeks you expect him/her to work in a year, and what you expect the weekly split to be of their hours. We’ll calculate the effective hourly rate for you.