Clocking in and out: Can we round up or down? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Clocking in and out: Can we round up or down?

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Q. My company tracks the hours of nonexempt employees through the use of a time clock. In determining the wages to be paid an employee, can we round up or down to the nearest five-minute increment?

A. Employers should first note that neither the Fair Labor Standards Act (FLSA) nor California law requires employers to use a time clock. What companies are required to do is keep records of the hours worked by nonexempt employees in some permanent form. While “accurate” record-keeping is necessary for computing time worked, the FLSA does permit employers to “round off” a worker’s arrival and departure times to the nearest five minutes, one-tenth of an hour or quarter of an hour.

However, because employees are entitled to their pay for all time worked, employers must ensure that rounding practices don’t always favor the employer. The rounding method must balance out over time. For example, if an employer rounds to the nearest five minutes, it should either always:

  • Round in favor of the worker
  • Round back to the previous five-minute mark for either workers’ starting or stopping times, and round forward in the alternative situation.

Err on the side of paying employees for all time worked.

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