Easy Ways To Calculate How Many Work Hours Are In a Year | Homebase (2024)

Every year has 52 weeks, 365 days, and 8,760 hours. (Of course, assuming it’s not a leap year.) But how many work hours are there in a year?

Figuring out the number of work hours in a year can be a bit complicated. But as an employer, knowing this information inside out can help set your business up for success.

So, let’s do the math and find out.. And as a bonus, we’ll show you exactly how you can calculate those hours yourself.

What are Work Hours vs. Non-Work Hours?

Work hours account for the time your team spends at your business—whether that’s in person, in the field, or virtually. This is the time that you’re paying your employees for.

On the other hand, non-work hours are times when employees are completely off the clock. This is the time that employees get to themselves. Days off are a perfect example of these.

For the most part, the difference between the two is pretty straightforward. But there are some common situations where distinguishing between the two is a bit less clear-cut. Here are some common examples:

• Break times: Shorter breaks, like 15-minute stretches, are typically paid and considered work hours. But longer ones, like 30-minute lunch breaks, are typically considered non-work hours—assuming the employee is totally free from any work-related obligations.
• Commuting time: Generally, the time employees spend traveling to and from work isn’t considered a part of their work hours. But there are some exceptions, like employees who need to travel between different locations as part of their job. In these situations, there are usually clear guidelines around when employees are officially “on the clock.”
• Before or after-shift hours: Employees who come to work early or stay late who aren’t actively working typically don’t have that additional time counted as part of their work hours. Of course, there are always exceptions to the rules. For example, if a supervisor or manager approves those extra hours, they can officially turn into work hours.

Work Hours for Hourly Employees vs. Salaried Employees

The biggest difference in work hours for hourly employees vs. salaried employees is how they get paid.

Hourly employees are paid by the hour, so their pay goes up if they work more hours, and vice versa. This means in many situations their work hours can vary from week to week—especially if the employee schedule isn’t fixed. It’s why employee time clocking is important for hourly teams; it keeps an accurate record of hours worked.

In contrast, salaried employees are paid a fixed amount, regardless of how many hours they work. Their contracts typically outline the expected work hours a week—usually 35-40 hours for full-time employees. Because their wages don’t change, no matter how many hours they work, salaried employees aren’t often required to track their hours. (Although it can still be helpful!)

Why you Should Know How Many Work Hours are in a Year

Unless you’re a math whiz, calculating the number of work hours in a year can feel like a complete pain. Why bother?

(Gestures broadly to the list below)

• Managing labor costs: Your employee’s time—aka labor— is one of the biggest expenses for small businesses. By keeping a close eye on your labor costs, you’ll be able to make sure you’re staying on budget and not accidentally letting your employee wages run wild.
• Reviewing PTO: Paid time off (PTO) policies vary from business to business. Whether or not you have to offer PTO depends on your state and municipality. In general, accrued paid time off is determined by hours worked. So, you need to know how many hours your team works per year to accurately calculate PTO accrual for hourly employees.
• Meeting FLSA guidelines: The Fair Labor Standards Act (FLSA) doesn’t technically require you to calculate the work hours per year. But it does require you to keep a detailed record of all hours worked for at least three years. So if you’re staying compliant, you’ll only be a step or two away from knowing exactly the number of work hours in a year.
• Calculating employee taxes: Employee income taxes are calculated based on their wages earned in a calendar year, which for hourly employees is determined by the number of hours they’ve worked. In order to know how much income tax to deduct from their earnings, you need to how many hours an employee works in a given year.
• Preventing employee burnout: If you’re not tracking employee hours, it’s easy to end up with employees working way more hours than you expected. Not only can this put a dent in your business’s bottom line, but it can also lead to employee burnout—which has its own set of consequences.

How Does PTO Factor Into Work Hours for the Year?

From sick days to vacation time, these days off are usually collectively referred to as PTO. As the name suggests, these are hours that employees still get paid—even though they actually aren’t scheduled.

PTO is often either included as part of a total compensation package or it’s accrued based on time worked. But here’s the catch: while employees get paid for PTO, the hours taken for PTO typically aren’t considered work hours.

This makes PTO a bit of a unique and complicated situation. So here are two things you should remember when considering PTO:

1. You should factor in the costs of PTO when budgeting your annual labor costs.
2. You shouldn’t include PTO in the total amount of time worked during the year.

5 Steps to Calculate Work Hours in the Year

Many small business tools, like Homebase, can help you calculate your exact work hours for each year in just a few clicks.

But if you like to keep things old school—or just want to know the math behind the magic—here’s how you calculate the average number of work hours in the year for your business.

1. Calculate weekly hours

The first thing you want to do is calculate the average number of working hours in a week for all your employees. If you find the number of hours varies significantly, you can take an average of a month or even a quarter.

For most employees, full-time hours land somewhere between 35 and 40 hours a week.

Let’s say you have 3 full-time hourly employees working an average of 40 hours a week, your average weekly work hours will be 120.

Don’t forget about overtime: When an employee works over 40 hours in a given work week, the additional hours are considered overtime hours. The FLSA requires overtime hours to be paid at 1.5x an hourly employee’s regular wage. While the cost of overtime hours differs from regular hours, they should still always be included when calculating the total weekly hours worked.

2. Multiply by weeks in a year

There’s about 52 weeks in a year. So to get your total hours per year (before factoring in paid holidays or PTO), you simply multiply your weekly hours by 52.

For the 3 employees pulling 40 hours a week, your total hours per year will come to 6,240.

3. Calculate total public holidays

Public holidays are days when businesses are typically closed.

There are 11 federal public holidays that are observed in the US:

• New Year’s Day
• Martin Luther King Jr. Day
• Presidents Day
• Memorial Day
• Juneteenth
• Independence Day
• Labor Day
• Columbus Day
• Veterans Day
• Thanksgiving
• Christmas Day

If your employees are off for these holidays, you’ll need to remove them from your total annual hours. To calculate the total holidays for each employee, you’ll multiply the number of average hours worked per day by the number of holidays.

Let’s say your 3 employees were off on all 11 holidays. If they’re scheduled an average of 8 hours a day, you would have a total of 264 holiday hours.

Even if you’re closed, some businesses opt to offer employees holiday pay. This means employees would still get paid as if they were there a full day. There’s no requirement to provide employees with holiday pay but it can go a long way in keeping your employees happy.

Many service-based businesses stay open during public holidays. So depending on your location and industry, you might still need employees during a holiday. If employees are scheduled on a public holiday, you shouldn’t include those hours in this calculation.

Working holidays: Some states, such as Rhode Island, require employees who work on certain holidays to be paid additional pay. Typically this is 1.5x an employee’s regular hourly wage.

4. Calculate additional time off

Now it’s time to calculate any additional time employees might take away from your business.

If employees have PTO, this time away from can be paid. But when calculating the total number of hours worked for the year, you should also consider all time off—paid and unpaid.

Let’s say each of your 3 employees takes 5 days off during the calendar year. Assuming an average of 8 hours per day, you’ll have a total of 120 hours of time off.

5. Subtract total time off from total annual hours

Finally, you’ll need to subtract the time off in both Step 4 and 5 from your total annual work hours in Step 2.

Following this example, your total work hours in the year for your business are 5,856.

6,240 – 264 – 120 = 5,856

Once you have your final total, you can use that number to help determine things like your labor costs and labor forecasts.

Maximizing Work Hours: It’s Not Just About Time

Understanding the total work hours in a year holds value, yet this figure by itself falls short of ensuring a matching degree of productivity.

The effectiveness of those hours is influenced greatly by aspects such as the concentration levels of employees, the adept handling of tasks, and the amount of interruptions present in the working environment.

For a real enhancement in the utility of your team’s work hours, examining approaches that elevate productivity and refine the utilization of time is beneficial.

Homebase Makes Calculating Work Hours for Hourly Employees Easy

Homebase is the all-in-one employee management app that makes managing hourly teams easier than ever. From tracking hours worked to streamlining payroll, you can get take control of your labor costs—without the hassle.

Businesses that use Homebase enjoy:

• Simplified scheduling: Keep your hours in check with a free employee scheduling app that helps you build schedules in minutes while meeting your labor targets
• Easy time tracking: Stay on top of hours worked with a free time clock app that helps you and your team make the most of every minute.
• Painless PTO management: Set PTO policies, manage accruals, and approve time-off requests all from one app.

Ready to make calculating work hours a breeze?

No math required. Schedule your hourly teams and run payroll, all in one place. Get started with Homebase today.