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Beware of costly time-clock ’rounding’

by on
in Human Resources

If your organization uses a time clock, you probably haven't thought about whether it's programmed accurately. But a seemingly small hiccup in "rounding" hourly employees' work time could cost big bucks.

Federal law says your time clock can round employees' hours as long as it doesn't result in underpaying them. You can round to the nearest minute, five minutes or even up to 15 minutes at the beginning and the end of shifts. But the system can't consistently round in the employer's favor. That means the clock can't be programmed to round forward at the beginning of shifts and backward at the end.

While a general rounding practice may work to your advantage on occasion and to employees' advantage on others, the general idea is that, over time, the rounding will average out. As the following employer learned the hard way, regularly rounding in your favor can be an expensive mistake.

Recent case: After a security employee at a North Carolina hospital complained to the U.S. Labor Department about the hospital's timekeeping system, the agency performed an audit and ordered the hospital to pay $50,000 to security-department employees. But when the hospital audited timecard records of all hourly employees from the year in question, it found the problem was more widespread.

The audit revealed that the hospital's time clock was programmed incorrectly to round off time to the nearest half-hour. So, employees who clocked in 15 minutes early for their shifts (or 15 minutes after their shifts ended) weren't paid for the extra time. Result: Labor ordered the hospital to pay $1.3 million to 3,500 employees.

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