All employers must keep track of their hourly employees’ start times and end times to ensure fair and accurate pay. With wage and hour lawsuits on the rise, employers need to be careful how they round employee time.
Read our tips on rounding rules to make sure your employees are fairly compensated, and your business is compliant.
Know Time Rounding Rules
The most specific guidance for tracking non-exempt employee time comes from the Wage and Hour Division of the Federal Department of Labor (DOL). As per CFR § 785.48:
“It has been found that in some industries, particularly where time clocks are used, there has been the practice for many years of recording the employees’ starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. For enforcement purposes this practice of computing working time will be accepted, provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.”
While it is permissible at the federal level for employers to round to the nearest 5-, 10- or 15-minute increments, time clock rounding rules by state can differ from the federal ruling. Find your state’s Labor Department contact information here.
Weigh Your Options
Once you know the rounding rules for your state, there are several ways you can round and track employee time, depending on what makes the most sense for your business.
Options for time rounding include:
- 7-Minute Rule: If you round by 15-minute increments, minutes 1-7 would be rounded down, while minutes 8-15 would be rounded up. An 8:05 punch would be rounded down to 8:00, while an 8:11 punch would be rounded up to 8:15.
- Round all clock-in times in favor of the employee, and all clock-out times in favor of the employer. In this scenario, an 8:10 punch would be rounded to 8:00 and a 4:35 punch would be rounded to 4:30.
- Round all punches in favor of the employee. While this may be a costly option for your organization, it will help avoid any wage and hour issues.
Once you’ve decided how you will round employee time, you also have several options for how you can track time, including:
- Rounding each punch individually, including breaks, and then adding up the total amount of hours worked during one shift
- Rounding the total block of time between two punches, and adding together the amount of hours worked at the end of the day
- Rounding the total amount of hours worked per day
Audit Your Employee Time Records
The DOL’s ruling assumes that, over time, rounding will work out evenly so that employees are fairly compensated for time worked.
If an employer, whether knowingly or unknowingly, rounds an employee’s hours so as to ultimately favor the organization, they can face serious financial and legal trouble.
Employers should perform regular audits on their time records to ensure this is not the case, and if so, adjust their timekeeping practices accordingly.
How XpanseHR Can Help
XpanseHR’s Compensation team can help ensure you are compliant with the FLSA and determine which method of employee time clock rounding is best for your organization and workforce.
Our team provides a range of Compensation solutions, including Market Pricing, Salary Structure, Executive Compensation Programs, Equity Analysis, FLSA Compliance, Performance Management Creation, Compensation Trainings, Outsourcing, and more.
To learn more, contact email@example.com.