What is the difference between Gross Pay and Net Pay?

Gross pay is the total amount of money an employee earns before any taxes or deductions are taken out. Net pay (or 'take-home pay') is the amount the employee actually receives after federal taxes, state taxes, Social Security, and Medicare are deducted.

How do I calculate unpaid lunch breaks?

Under the FLSA, bona fide meal breaks (typically 30 minutes or more where the employee is completely relieved of duty) are unpaid. You subtract these minutes from the total daily hours worked.

How long do employers need to keep payroll records?

The federal Fair Labor Standards Act (FLSA) requires employers to keep payroll records, including timesheets and hours worked, for at least three years.

Payroll Hours Calculator

3 Steps to Calculate Payroll

Step 1 Enter the Hourly Rate. This is the base pay before any overtime or bonuses.

Step 2 Input Clock In/Out times. We automatically subtract unpaid breaks.

Step 3 Click Print Pay Stub to save a copy for your tax files or accountant.

The Employer’s Guide to Payroll Calculation

Processing payroll manually can be stressful. Whether you are managing a small retail team or a crew of contractors, accuracy is critical. A miscalculation in total hours doesn't just result in an unhappy employee; it can lead to severe wage-and-hour compliance issues with the Department of Labor.

Gross Pay vs. Net Pay

Our Payroll Hours Calculator is designed to calculate Gross Pay. It is important to understand the difference before you write a physical check to your employee:

Gross Pay: The total amount of money an employee earns based on their hourly rate and hours worked. (e.g., 40 hours × $20/hr = $800 Gross Pay).
Net Pay: Often called "take-home pay," this is the amount left over after you deduct Federal Income Tax, State Tax, Social Security (FICA), Medicare, and any benefits premiums.

Handling Employee Breaks Legally

One of the most common mistakes employers make is miscalculating break times. Under the Fair Labor Standards Act (FLSA), you must follow these rules:

Rest Breaks (Paid): Short breaks lasting 5 to 20 minutes must be counted as paid work time. Do not deduct these from the employee's timesheet.
Meal Breaks (Unpaid): Bona fide meal periods (typically 30 minutes or more) are not considered work time. The employee must be completely relieved of all duties. You can use the "Break" column in our calculator to automatically subtract these minutes.

Record-Keeping Requirements

Did you know that federal law requires employers to keep accurate payroll records for up to three years? You must maintain documentation of the hours worked each day and the total hours worked each workweek. We highly recommend using the Print Pay Stub button on our calculator to save a PDF or physical copy of each week's calculation for your tax files.

Frequently Asked Questions

How do I handle "Time and a Half" overtime?

If your employee worked over 40 hours in a single workweek, the FLSA requires you to pay the excess hours at 1.5 times their regular hourly rate. Our gross pay estimator calculates straight time. To calculate exact overtime wages, please use our dedicated Overtime Calculator.

What happens if an employee forgets to clock out?

By law, you must pay employees for all hours they actually worked. If an employee forgets to punch out, you should communicate with them to determine the exact time they left and manually adjust the timesheet before calculating their gross wages.

Can I round employee time punches?

Yes, the federal government allows employers to round employee time to the nearest 15 minutes (quarter-hour), as long as the rounding is neutral and doesn't exclusively benefit the employer. Read our 7-Minute Rounding Guide for more details.