Do you find yourself spending endless hours manually calculating employee work hours and pay, only to end up with confusing and potentially inaccurate results? You’re not alone.
Time card conversion can be a tricky process that eats up valuable time and resources for small businesses. In this article, we’ll walk you through the steps of time card conversion, how to convert timesheets to decimal and provide tips and tricks to make the process more efficient.
We’ll even introduce you to some time tracking software that can automate the process for you.
What is Time Card Conversion?
Time card conversion is the process of turning the hours and minutes that an employee has worked into a format that can be used to calculate their pay.
It’s important to get this right because you want to make sure that employees are paid accurately, avoid time clock fraud and ensure you’re paying your team in accordance with labor laws and company policies.
Time Card Conversion Examples
If an employee has worked 8 hours and 30 minutes, you would convert that to 8.5 hours in decimal form. This decimal form is what you would use to figure out the employee’s pay based on their hourly wage.
Let’s say another employee worked 7 hours and 45 minutes. To convert this to decimal form, you would divide the minutes worked by 60, which gives you 0.75. Then, you would add that decimal to the total number of hours worked, which gives you 7.75 hours.
This is the decimal form that you would use to calculate their pay based on their hourly wage. And just like before, it’s important to make sure that the time card conversion is accurate to ensure that your employees are paid fairly and on time.
Some people do time card conversion manually, but there are also tools like Homebase that can automate the process and make it more efficient.
Time to Decimal Chart
How to Convert Time to Payroll
Step 1. Calculate the Total Time Worked
To do this, you can either use the actual work hours that your employee has recorded or use rounded hours as defined under US Federal law. If you’re using actual work hours, you’ll need to add up the hours and minutes separately and convert any remaining minutes into hours.
Don’t forget to account for lunch breaks and overtime. If you’re using rounded hours, you’ll need to round the clock-in and clock-out times to the nearest quarter-hour.
Using Actual Hours
If you want to calculate your employees’ pay based on the actual hours they worked, you’ll need to gather the total hours and minutes they worked during the pay period. You can find this information on their timesheet or employee time tracking system.
Let’s say you have an employee who works 8 hours a day for 5 days a week and has lunch at their desk, so they don’t need to clock in and out for a lunch break. To figure out their total work hours, you’ll need to add up the hours and minutes separately.
So, for this employee, they worked 40 hours in total (8 hours a day x 5 days). But we also need to account for the minutes they worked. Let’s say they worked 17, 27, 5, 14, and 10 minutes each day, respectively. That’s a total of 73 minutes for the week.
To convert those 73 minutes into hours, we need to divide by 60 (since there are 60 minutes in an hour). That leaves us with 1 hour and 13 minutes. If we add that to the 40 hours they worked, we get a total of 41 hours and 13 minutes for the pay period.
Note: When you calculate the total work hours, remember to account for the lunch break and overtime.
Using Rounded Hours
As an employer, you can choose to round your employees’ work hours to make payroll calculations easier.
Under US Federal law, you’re allowed to round hours to the nearest quarter. That means that each quarter consists of 15 minutes, and you’ll need to adjust your rounding accordingly.
Here’s an example: let’s say you have an employee who clocks in at 9:03 AM and clocks out at 5:25 PM, without taking a lunch break. In reality, they worked for 8 hours and 22 minutes that day.
But when you round their time, you’ll need to round the clock-in time down to 9:00 AM because it’s less than eight minutes past the quarter-hour. And you’ll need to round the clock-out time up to 5:30 PM because it’s more than eight full minutes past the previous quarter.
So even though the employee actually worked for 8 hours and 22 minutes, you’ll round it up to 8 hours and 30 minutes.
Remember, it’s important to round your employees’ time correctly to avoid any legal issues or complications with payroll calculations.
Step 2. Convert Standard Hours to Decimal Hours
Using decimal hours format is a great way for employers to manage payroll because it’s much simpler than using standard hours and minutes. If you use the standard format, it’s easy to get confused and end up with incorrect wages.
To convert time from standard format to decimal format, all you have to do is divide the minutes by 60. Let’s say an employee worked for 37 hours and 43 minutes in a given week. To convert those 43 minutes into decimal format, you would divide by 60:
43/60 = 0.72
Then you would add that decimal value to the total number of hours worked to get the total decimal time. In this case, the employee worked for 37.72 hours in that week.
That’s all there is to it! It may seem small, but converting to decimal format can save you a lot of time and hassle when it comes to payroll calculations.
Step 3. Multiply Decimal Time by Wage Rate
Once you’ve converted your employees’ work hours into decimal format, it’s easy to calculate how much you need to pay them. All you have to do is multiply their decimal hours by their hourly rate (wage rate).
For example, let’s say an employee worked 37.72 hours in a week and has an hourly rate of $20. To calculate their weekly pay, you would multiply their decimal hours (37.72) by their hourly rate ($20):
37.72 hours x $20 = $754.40
So the employee’s gross pay for that week would be $754.40. But remember, you’ll still need to account for taxes, insurance premiums, retirement fund contributions, and any other fees or deductions that apply.
Invest in Employee Time Tracking Software
There are a few ways to calculate payout figures, such as doing it manually, using an online work hours calculator, or using payroll and time tracking software like Homebase to automate the process. It all depends on what works best for you and your business.
If you’re looking for an easy and efficient way to calculate your employees’ payout figures, consider investing in employee time tracking software.
Homebase time tracking software is user-friendly and can automate the entire process, making it quick and easy to calculate your employees’ payout figures based on their hourly wage.
With Homebase, you can even track employee hours, monitor their schedules, and export time cards to payroll with just a few clicks. It’s a great tool for any small business with hourly workers looking to streamline their time tracking and payroll process.
Save Time on Payroll.
Auto-convert timesheets into wages, catch errors, pay your team, and file taxes all in one place.
Remember: This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.
