Before I get into the arithmetic – WHICH IS EASY – I must establish first that there is no law on this. This is just something that your payroll/accounting/HR folks will quibble over from time to time, so you need an expert to make it canon. That’s what this is all about: How to convert a salary into an hourly wage.
The simplest and most common methods to make the conversion are as follows:
Simply use the annual salary and divide into it the scheduled hours per year.
Example: John earns $50,000/year. He is scheduled to work 40 hours a week. There are 52 weeks per year.
To get his hourly rate, divide 2,080 hours into $50,000. The hourly rate is $24.03.
This works if the calculation is done on a weekly (versus annual) basis, too.
Example: If Mary makes $1,000 per week, and is scheduled to work 40 hours per week, divide 40 hours into $1,000 to get her hourly rate. $25.00
The other way to do this is to use the actual hours averaged instead of the "scheduled" hours.
Using the examples above...
Example: If John averages 47.5 hours per week, then 47.5 x 52 = 2470 and his $50,000/2470 = $20.24.
Example: If Mary averages 37.5 hours per week, then her $1,000/37.5 = $26.66.
This method could result in a raise for some people, but a cut in pay for others. In these examples, we see that Mary, working less, gets an increase, while John, working more, is given a decrease. Needless to say, this is not my personal preference; but it is viable.
NOTE: OPM uses 2,087 hours instead of my 2,080. You could do that, too!
Visit the SHRM Compensation Data Center for real-time, HR-reported compensation data reports.