Considering that DOL is rather strict about the “fairness” of recording work hours, the dispute can turn into a full-blown lawsuit and lead to further investigation into your payroll practices.īefore you implement time clock rounding at your small business, it’s important that you first discuss it with your employees. If the grievance builds up over time, a dissatisfied employee may take legal action. In more grim scenarios, employers use rounding as an easy way to pocket some extra cash, which is considered wage theft.

Sometimes, business owners are not transparent enough about it or don’t educate the workforce on how it affects wages. It’s no secret that employees are not particularly fond of time clock rounding. If you still want to give it a try, you should be aware of some of the risks that come with the package. Now that you know how time clock rounding works, the big question that remains is: “should I do it?” Would your current payroll process really benefit from this approach? It makes it easier for you to run payroll, track your labor costs and avoid penalties. Make sure you’re staying in compliance with labor laws and use a time tracking app like Hourly to gather and save your team’s time and attendance data in one place. But did you know incorrect time cards can add up to costly penalties every pay period? You started a business because you saw a great opportunity, and now you have some employees to help you. Rounding to 15 minutes (or 1/4 hour) observes two thresholds that indicate whether the clock-ins and clock-outs are rounded up or down The first 7.5 minutes is always rounded down while the second-half 7.5 minutes are rounded up to a full quarter of an hour While they all work in a similar way, each may be suitable for a different type of business. There are several rounding methods that are generally compliant with the FLSA and DOL requirements. Finally, although rounding is legal under the FLSA, you may want to refer to state regulations first and see if they don’t overrule the federal law.Some of the information you need to store include total employees' time worked each day and week, overtime earnings and wages paid each pay period When you round employee work hours, it’s key to maintain accurate and complete records.Regardless of the rounding method, you must still observe the minimum wage and overtime requirements to stay compliant.The maximum rounding increment allowed by FLSA is 15 minutes so anything greater than that exposes your business to potential legal trouble.If it’s impossible to ensure a “neutral” outcome, rounding should favor the employee Time clock rounding should be performed in a way that doesn’t favor the employer but rather “averages out so that the employees are fully compensated for all the time they actually work”.If you choose to round to 15-minute increments, you need to observe the 7-minute rule for every 1 to 7 minutes that are rounded down, there is a corresponding timeframe of 8 to 14 minutes that are rounded up to the nearest quarter-hour and counted towards total work time.Here are a few things to keep in mind when rounding work hours: This method can’t be used as a means of cutting labor costs or favor the employer in any way. The Department of Labor (DOL) allows employers to round time up or down within 15-minute increments, but there’s a catch. And yet, some small-business owners still use rounding to calculate their employees’ wages. These days, thanks to GPS-enabled time tracking and payroll automation, fishing for small deviations from regular clock-ins and clock-outs has become much easier. Depending on the type of your business and general industry practices, you can round work hours in 5-minute and 15-minute increments or to 1/10th of an hour (more on that in a moment).

In a nutshell, time clock rounding means that the actual work hours of your nonexempt employees are rounded up or down by set increments.

“So, what does time clock rounding mean?” This can be done either by asking employees to write their hours down, using regular time clocks or through time-tracking software. Under the Fair Labor Standards Act (FLSA), all employers are required to track and store employee time records completely and accurately. Time clock rounding helped streamline calculating wages and save chunks of time in the process.īut does it still make sense today? What Is Time Clock Rounding? Back in the day when handling payroll was pretty much a pen-and-paper process, employers would use rounding to account for odd minutes and seconds outside the regular work schedule.

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