Hourly pay to annual salary

Keep the work schedule in the formula

Annual gross pay equals hourly rate multiplied by paid hours per week and paid weeks per year. Monthly gross pay is annual gross divided by twelve.

Common full-time reference points

These examples show gross pay before taxes or deductions and assume 40 paid hours for 52 weeks.

Gross pay is not take-home pay

Overtime premiums, unpaid leave, bonuses, taxes, benefits, and payroll schedules can all change what appears on a paycheck.

Do not compare unlike figures: compare gross with gross, or take-home with take-home.

How overtime changes the annual figure

Under the federal Fair Labor Standards Act, covered employees who are not exempt must be paid at least one and one-half times their regular rate for hours over 40 in a workweek.

At $20 an hour, a 45-hour week pays 40 × $20 = $800 plus 5 × $30 = $150, for $950. Over 52 weeks that is $49,400 — not the $46,800 that 45 × $20 × 52 would suggest.

The Department of Labor is explicit that hours cannot be averaged over two or more weeks. A 50-hour week followed by a 30-hour week earns ten hours of overtime, even though the two weeks average 40. Whether a particular job is covered, and whether state law adds daily overtime or a higher rate, depends on the job and the state.

Unpaid weeks and shorter schedules

The 52-week year only holds when every week is paid. Change the paid weeks or the hours and the same hourly rate produces a different salary.

When comparing an hourly offer with a salaried one, ask how many weeks the hourly job actually pays and whether holidays are paid, before comparing the annual numbers.