Q&A: Be careful how you round employee work hours

Question: We recently changed to a new timekeeping and payroll system, and the new system sometimes rounds down the amount of time an employee worked. Is that legal?
 
Answer: Probably, but it depends on how much time is rounded down and the state in which the employee works. A recent opinion letter issued by the U.S. Department of Labor confirmed that rounding of work time is still allowed under the Fair Labor Standards Act (FLSA), as long as the rounding practice is neutral on its face and averages out over time so that employees are compensated for all the time they actually work (FLSA2019-9). Under the FLSA, rounding is permitted to the nearest quarter of an hour (15 minutes) or smaller increment. If your rounding practice consistently rounds down the employee’s time worked to the quarter hour, for example, then the employee may be losing 1-14 minutes of work time each day. Although that practice seems neutral on its face, it would regularly result in employees losing work time and therefore would not comply with federal wage and hour law. A system that rounds up or down to the nearest quarter hour is allowed under the FLSA because the time rounded will average out.
 
Remember, though, that compliance with state law is also necessary. Many states have more specific requirements when it comes to rounding. For example, the California Supreme Court has ruled that employers generally must pay for every minute of work time. Under Washington law, employers can round based on the “7-minute rule” (i.e. when employees are 1-7 minutes late, they must be paid for the entire quarter hour; but if they are 8 to 14 minutes late, payment need not begin until the next quarter-hour). Likewise, when employees clock out 8 or more minutes before the end of the shift, they need not be paid for that last quarter hour, but if they clock out 7 or fewer minutes before the end of the shift, they must be paid through the end of the shift.
 
As you can see, every minute counts when it comes to rounding, so it’s best to review your practice with your Vigilant employment attorney to make sure you’re not running afoul of the FLSA or state law. Vigilant members, check out our Legal Guide, Watch Out for Wage and Hour Issues with Time Clocks.

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