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How earnings are prorated

Understanding earnings calculations in Warp

Ayush S (CEO, Warp) avatar
Written by Ayush S (CEO, Warp)
Updated over 2 weeks ago

If you're wondering why your paycheck shows a specific number of hours (like 86.67), this article explains how we calculate those numbers for different pay schedules and situations.

Standard Hours by Pay Frequency

Your paycheck shows hours based on your pay frequency, calculated from standard annual working hours (2,080 hours per year):

Pay Frequency

Hours per Period

Pay Periods per Year

Weekly

40 hours

52 periods

Bi-weekly

80 hours

26 periods

Semi-monthly

86.67 hours

24 periods

Monthly

173.33 hours

12 periods

Why 86.67 Hours for Semi-Monthly?

Semi-monthly pay periods don't align perfectly with weeks. The calculation is:

  • Annual hours: 2,080 hours (40 hours/week × 52 weeks)

  • Semi-monthly periods per year: 24 (twice per month)

  • Hours per period: 2,080 ÷ 24 = 86.67 hours

This represents the average hours across all semi-monthly periods in a year, since some periods include parts of three different weeks while others span just two weeks.

When Your Hours Will Be Different

Mid-Period Start Dates

If you start employment in the middle of a pay period, your hours will be prorated based on working days.

Example: Starting July 7th in a July 1-15 semi-monthly period

  • Total working days in period: 11 days (July 1-4, 7-11, 14-15)

  • Working days you were employed: 7 days (July 7-11, 14-15)

  • Percentage of period worked: 7 ÷ 11 = 63.64%

  • Your prorated hours: 86.67 × 63.64% = 55.15 hours

Pay Rate Changes Mid-Period

If you receive a raise or pay change during a pay period, your hours may be split between the old and new rates.

Example: Raise on February 10th in a February 1-15 semi-monthly period

  • Total working days in period: 10 days

  • Days at old rate (Feb 1-9): 5 days = 50% of period

  • Days at new rate (Feb 10-15): 5 days = 50% of period

  • Hours shown: 86.67 × 50% = 43.34 hours for each rate

Partial Employment Periods

If you take unpaid leave or have a gap in employment during a pay period, hours are prorated accordingly.

Different Calculations for Fixed vs. Variable Pay Frequencies

Fixed Pay Frequencies (Weekly, Bi-weekly)

These always have the same number of working days, so calculations are straightforward:

  • Weekly: Always 5 working days = 40 hours

  • Bi-weekly: Always 10 working days = 80 hours

Variable Pay Frequencies (Semi-monthly, Monthly)

These can have different numbers of working days depending on how calendar dates fall:

  • Semi-monthly: Can range from 8-12 working days depending on weekends and holidays

  • Monthly: Can range from 20-23 working days

For variable frequencies, we use the percentage method described above to ensure accurate prorations.

Hourly vs. Salaried Employees

Salaried Employees

  • Hours shown represent the standard calculation for your pay frequency

  • Used for payroll processing and compliance reporting

  • Your actual pay is based on your annual salary divided by pay periods per year

Hourly Employees

  • Hours shown represent actual hours worked

  • Pay = hours worked × hourly rate

Why We Show Hours for Salaried Employees

Even though you're paid a fixed salary, we show hours because:

  1. Payroll compliance: Required for tax calculations and reporting

  2. Benefits calculations: Used for determining hourly equivalent rates

  3. Overtime eligibility: Helps determine if overtime rules apply

  4. Transparency: Shows how your pay period compensation is calculated

Common Questions

"Why do my semi-monthly paychecks show different hours sometimes?"

Semi-monthly periods can have different numbers of working days. While we use the standard 86.67 hours for full periods, prorations due to start dates, pay changes, or leaves will show different amounts.

"My bi-weekly paycheck shows exactly 80 hours, but my semi-monthly shows 86.67. Why?"

This is normal! Bi-weekly periods always have exactly 10 working days (80 hours), while semi-monthly periods average 10.83 working days across the year (86.67 hours).

"I worked 7 days but my paycheck shows 55 hours. Is this wrong?"

If you started mid-period, this is likely correct. The hours represent your prorated portion of the standard semi-monthly calculation, not literal hours worked.

Getting Help

If you're still unclear about your specific situation:

  1. Check your start date and pay period dates

  2. Count the working days you were employed during the period

  3. Calculate the percentage: (your working days ÷ total working days in period)

  4. Multiply by standard hours for your pay frequency

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