In my last post, I discussed how the FLSA approaches the “rounding” of time. In short, rounding is simply the practice of adjusting time clock punch times within specific bounds. For example, if your employees punch in for work at 7:57, 8:01, and 8:02, your rounding rules may treat all of those punches as occurring at 8:00 a.m. for payroll purposes. Here are a few pointers that I mentioned would help you avoid some of the risks associated with rounding your employees’ time entries.
Is rounding even necessary?
Sometimes clients ask me about whether they should implement a rounding scheme, since the regulations allow it. My answer is usually NO! In 1938, when the FLSA was passed, it might have made sense to use rounding when tabulating timesheets without the aid of computers, Excel, or some other automated process. But this is 2014! Even small businesses should be able to calculate time right down to the last minute. Unless you are facing a unique challenge, tracking straight time is easy and avoids any of the ambiguity of rounding practices. It’s also transparent to employees.
However, there are some employers where tracking straight time has some unique challenges. One such example is accounting for the time employees take lining up at the time clock to clock in or clock out. Recently, a colleague and I discussed this very situation with a client. At the beginning and end of each shift, the employer had hundreds of people lining up to record a time punch. Even though the digital clock used a proximity card and required no physical punching, this process still often took 8-10 minutes, meaning that employees would punch in or out a few minutes early or late. Rounding in this situation is certainly an option, as long as it sometimes will benefit both the company and the employees, as I discussed in my last post.
If you do decide to round time punches, stick with an interval specified in the regulations. 29 CFR § 785.48(b) gives you three standard increments you can use: five minutes, six minutes (1/10th of an hour), or 15 minutes (1/4 of an hour). Of course, check your state laws and regulations, too, as they may impose additional limitations, or even provide additional incremental rounding options.
Even in situations like the one above, though, consider whether you have a simpler, more transparent option available: buy more time clocks and start paying straight time. By shortening or eliminating the lines at the clock, you likely will get more productive time out of employees who no longer have to worry about queuing up. More importantly, using the exact time punch promotes transparency. Employees no longer have grounds to suspect that something untoward is happening to their time records, and this can reduce the risks of FLSA litigation down the road.
Rounding should never obscure your duties under the FLSA to accurately record the hours your employees work. The FLSA regulations specifically allow rounding, but ask yourself if rounding is really your best option. If you weigh the risks and benefits and find that it is, make sure that you don’t round yourself into a DOL audit and FLSA litigation.