Tracking and managing employee time is essential for boosting productivity, improving accountability, and ensuring they're fairly compensated.
When tracking time, companies use hours and minutes. But this standard format has to be converted into decimal time for payroll purposes.
And that is where things get tricky since many business owners aren't sure how this procedure works. As a result, they might fail to pay their employees accurately and correctly.
This is where the time conversion chart comes in.
This article will discuss why timesheet conversion is essential, how to convert hours and minutes into decimals, and which tools to use.
Let's put things into perspective.
You've decided to track your employees' time, and it's the end of the month. Calculating payroll goes smoothly until you run into an employee who, for example, worked 20 hours and 17 minutes.
That's not a perfect, round hour but a fraction of it.
To determine the payable amount for that particular employee, the manager can't use the traditional format.
A pay rate is expressed in hours, not minutes - an employee's wage is, for example, $20 per hour.
Not per minute.
And that's the root of the problem.
In other words, you can't simply multiply the $20 pay rate by 20 hours and 17 minutes to get the exact amount the employee from our example earned.
The time conversion chart is used to convert hours and minutes from the standard to decimal format.
Once you do the timesheet conversion for payroll, it's easy to multiply the decimal time with the pay rate and get an accurate compensation calculation.
Some organizations use military time or the 24-hour clock.
In this case, the timesheet conversion process involves an additional step.
First, you have to convert military time to standard hours and then use the time conversion chart to convert it to the decimal format for payroll.
We'll talk about this process in greater detail below.
If your company hires hourly workers, then timesheet conversion is necessary for recording their time and attendance accurately.
By implementing the decimal format, you can minimize the odds of inaccurate payroll time and payroll calculations. This is particularly important if you use paper timesheets and manually record employee hours.
These issues can result in overpaying your employees. Besides hurting your bottom line, such mistakes can cause unnecessary complications.
On the other hand, if your employees get less than they should, you risk litigation and being slapped with hefty fines.
The time conversion chart will standardize your time records, thus helping you make accurate payroll calculations and avoid all these unpleasant scenarios.
It's worth mentioning that even if you don't hire hourly employees, you still need to use the time conversion chart when you calculate overtime hours and pay for your salaried employees.
There are different methods of timecard conversion you can use to prepare payroll, but not all of them are accurate.
First, it's important to understand what steps you should take to convert hours and minutes to decimals.
You can calculate the total hours and minutes in two ways:
For this method, you need employees' timesheets for the pay period.
Now, calculate the total hours and minutes separately:
Total hours: 6 + 6 + 4 + 4 + 3 = 23
Total minutes: 25 + 15 + 18 + 54 + 14 = 126 minutes
The next step is converting minutes into hours:
126 minutes equal 2 x 60 minutes + 6 minutes = 2 hours and 6 minutes
After this, you combine the two results to get the actual hours worked:
Actual hours worked: 23 minutes + 2 hours and 6 minutes = 25 hours and 6 minutes.
When calculating the total hours worked, don't forget to take overtime hours and breaks into consideration.
The Fair Labor Standard Act defines the way employers can calculate pay by rounding employees' clock-in and clock-out time to "to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour."
But, once you decide to implement this practice, you'll find out that it's a bit more complex than it initially seems to be. If you aren't sure how to properly round hours, you risk underpaying your employees and getting into legal troubles.
So, practically, the law says you can decide to round up or down employee hours to the nearest quarter of an hour when doing the timesheet conversion.
Since a quarter of an hour is 15 minutes, rounding time works in the following way:
It's possible to round up to the next quarter only if the time is more than eight minutes past the previous quarter. However, if the time is less than eight full minutes past the previous quarter, you have to round it down.
For example, an employee's clock-in time is 8.03 a.m., and they clock out at 4.13 p.m. Let's assume they don't take a break for lunch, so the actual hours worked for that day are 8 hours and 10 minutes.
Therefore, you'll have to round down their time to 8.00 a.m. because 8.03 a.m. is less than eight minutes past the quarter of an hour. On the other hand, you'll round up their clock-out time to will have to be rounded to 4.15 p.m. since 4.13 p.m. is more than eight full minutes past the previous quarter.
As you can see, when rounding time, you have to take both clock-in and clock-out time into account. So, although the actual hours worked are 8 hours and 10 minutes, the rounded work time of the employee from our example will be 8 hours and 15 minutes.
Timesheet conversion can be confusing.
That's why discussing and understanding the difference between the decimal time versus the standard hours and minutes time is best.
This format is based on the fact that there are 60 minutes in an hour.
It's expressed using the HH: MM format, that is, hours and minutes separated by a colon (:) - 2:30.
This format bases its representation of time on decimal numbers, meaning that it uses numbers ranging between 0-9.
Hours and minutes expressed through this format are separated by a decimal separator or dot (.)
Therefore, in our example above, "2:30" means "two hours and thirty minutes." This would be expressed as "2.5" or "two and a half hours" in the decimal format.
Now that you understand the difference between the traditional hours and minutes and decimal time, we can discuss the timesheet conversion process.
Let's use the same 2:30 example again.
Converting the traditional time format to decimals isn't difficult to understand.
Start by dividing minutes by 60.
30/60 = 0.5
Now add 0.5 to the total hours worked, that is 2, and the result is 2.5 hours.
In short, the employee from this example worked 2.5 hours for this pay period.
To make it easier for you to do your timesheet conversion, here's a helpful time conversion chart you can download and use:
If you need to convert decimal hours to hours and minutes, use the following method.
To convert 2.50 to hours and minutes, divide 50 by 100 and multiply that result by 60 to get the total minutes. In this case, this translates to 2 hours 30 minutes.
The final step is calculating your employees' wages for the pay period.
Since you've converted their total hours and minutes to the payroll-friendly decimal format, it will be easier to calculate how much you have to pay each employee precisely.
The formula for this is:
Hourly pay rate x decimal time
Let's say an employee's hourly rate is $15, and they worked a total of 24.25 decimal hours over the week.
24.25 hours x $15 = $363.75, and that's how much their weekly wage should be.
Bear in mind that this is your employee's gross weekly pay, that is, before taxes and other deductions.
Doing this math for payroll can be repetitive and, even worse error-prone. Imagine how long it takes to do timesheet conversion for all your employees every week or month.
You may probably be familiar with the time format where the hour is greater than 12 and less than 25, such as 23:13.
This form of time presentation is what we call military time.
Converting military time to standard time, such as 2:05 a.m., is quite simple:
If the hour part of the military time is greater than 12, then subtract 12 from it and add PM to get the exact time. Let's tackle a few examples so you can get a better understanding of it.
Let's say you have 20:03 in military time, and you want to convert that to standard time.
You first subtract 12 from 20 (20 -12 = 8) and then replace the hour with 8. Then add the PM signifier to get 8:03 p.m.
If you want to convert 04:12 in military time to the standard time format, simply add the AM signifier to get 04:12 a.m.
Since in the morning hours military time reads the same as the standard time, all you have to do for the hours between 01:00 in the morning and 12:00 in the afternoon is add the AM signifier.
Doing timesheet conversion manually in a spreadsheet can be extremely tedious and time-consuming, not to mention that you risk making some very costly mistakes if you don't do the math right.
That's why it's best to streamline the entire process and ensure accurate timesheet conversion by investing in a time-tracking app like Timeero.
Timeero allows you to track hours efficiently and with no privacy concerns since the software activates when employees clock in and stops tracking time when they clock out.
Digital Time Cards will give you a detailed insight into how many hours each employee worked. It's also possible to set up clock-in and out reminders, in case employees forget to do it themselves.
The software records employee working hours in a suitable format, so that you don't have to think about it. All you have to do is choose the payroll software from the list of integrations and Timeero will do the rest - track hours, prepare timesheets, and export reports to the payroll service.
It's a set-it-and-forget-it approach that will help you save time, eliminate human error, and accurately reimburse your employees.
Proper timesheet conversion is essential for adequately compensating your employees. If you want a system that can handle your time clock hours and payroll, then Timeero is the right solution for you.
Timeero is a time tracker that performs timesheet conversion and exports your timesheets to the payroll solution of your choice through integration.