Payroll Time Conversion- How to Convert Minutes for Payroll

A primary responsibility that cannot be taken lightly is payroll management. Unfortunately, it is all too easy to come across errors in the process.

A common error frequently exhibited is improperly converting minutes for payroll. Here is a step-by-step guide into payroll time conversion.

Incorrect Payroll Conversion

Simply multiplying an employee's hours and minutes by wages causes errors and creates more work for the HR staff on the back end. The following is an example of what NOT to do-

An employee is paid $15 per hour and has worked 8 hours and 15 minutes.

Gross Wage = 8.15 x $15 = $122.25

In this case, the decimal is placed between the minutes and hours worked (8-15). This is incorrect because it assumes that 15 minutes is part of 100 total minutes, instead of the 60 minutes that are in 1 hour. As a result, the employee will not be paid the correct amount that is owed.

To properly calculate this employee's wages, convert the 15 minutes to hours first, and then add that number to the 8 hours worked. Remember that 15 minutes is out of 60 minutes, NOT 100 minutes. See below for clarification-

8 Hours and 15 Minutes is 8 + 15 / 60
Converted Minutes = 15 / 60 or .25
True Hours Worked = 8 + .25 or 8.25

Gross Wages = 8.25 x $ 15 = $123.75
This employee is owed $123.75, NOT $122.25.

Steps to Accurately Convert Minutes for Payroll

To avoid costly mistakes that create more work for the payroll staff, take the following steps-

1. Calculate Total Hours and Minutes
Businesses have a choice to use the actual hours worked, or round the number of hours worked up if the employee works more than 7 minutes past a quarter of an hour, or down if the employee works less than 7 minutes past the quarter of an hour.

Actual Hours
With this option, the total hours and minutes worked by each staff member during a payroll period is required. Add up the accumulated hours and minutes separately. For example-

Hours Worked-
Monday = 9.15
Tuesday = 9.25
Wednesday = 8.45
Thursday = 9.02
Friday = 8.57

Total Hours = 9 + 9 + 8 + 9 + 8 = 43
Total Minutes = 15 + 25 + 45 + 2 + 57 = 144
Convert the total number of minutes (144) to hours.

Hours = 144 / 60 or 2.4 Hours

Remember that it is out of 60 minutes. So, .40 hours is equivalent to 40 minutes.

Converted Number of Minutes to Hours = 2 hours and 40 minutes.

Now, add the total converted minutes to total hours.

Converted Minutes + Total Hours = 43 + 2 Hours and 40 Minutes = 45-40
The employee worked 45 hours and 40 minutes or 45-40 this week.

Rounded Hours
Federal law gives employers the option to round hours worked instead of adding the actual number of total hours worked. Here are the federal rounding rules-

Round Down- Less than 7 minutes past the quarter (1-7)
Round-Up- More than 7 minutes past the quarter (8+)

Utilizing the previous example-
Monday = 9.15 (9.15)
Tuesday = 9.25 (9-30)
Wednesday = 8.45 (8-45)
Thursday = 9.02 (9)
Friday = 8.57 (9)
First, add up the total number of rounded hours.

Total Hours = 9 + 9 + 8 + 9 + 9 = 45
Then, add the total number of rounded minutes.

Total Minutes = 15 + 30 + 45 = 90
Convert the number of rounded minutes to hours-

Hours = 90/60 or 1.5 Hours
Remember that it is out of 60 minutes. So, .5 hours is half of 60 minutes or 30 minutes.

Number of Rounded Minutes to Hours = 1 hour and 30 minutes.

Then, add the total number of rounded minutes to the total number of rounded hours.

Rounded Minutes + Rounded Hours = 45 + 1 Hour 30 Minutes = 46-30
The employee worked 46 hours and 30 minutes, or 46-30 this week.

2. Converting Minute to Decimals
Minutes must be converted to decimals for payroll so employees are paid correctly. Any number to the right of a decimal point is out of 60 total minutes, or 1 hour. To convert minutes to decimals, simply divide the total number of minutes by 60.

For example, 8 hours and 15 minutes of work can be written as 8-15.

That is also 8 hours and 15 / 60 minutes.

Divide 15 by 60 to get a total of .25.

The total number of hours worked to reflect this pay period is 8.25 hours.

3. Multiply Calculated Time & Wage Rate
After converting an employee's time, calculate how much to pay the employee. Simply multiply the wage rate by the converted decimal time.

After converting the hours worked into decimals, multiply those hours by an employee's hourly rate.

Using the previous example of 8.25 hours at $15 per hour-

Gross Wage = 8.25 x $15 = $123.75

Options to Track Converted Minutes

Staying organized can help make it easier to convert minutes to payroll. Here are 3 different ways to track and calculate converted minutes.

1. Spreadsheet
If the business doesn't want to invest in payroll software or spend time converting minutes by hand, a spreadsheet may be a good option. Spreadsheets allow employers to track employee time, manage minutes, and calculate conversions. Excel offers numerous algorithms to help accelerate the conversion process.

2. Payroll Software
Payroll software integrates with timekeeping software, making it easier for HR or those in charge of payroll to track and manage employee hours. Businesses won't have to worry about any of the various mathematical calculations needed to convert minutes to hours; the software system does it automatically.

3. By Hand
This option works for very small businesses that only have a handful of employees. If planning to convert minutes by hand, make sure to carefully follow the steps in this article.