When computing employee pay, are we allowed to round off employee working hours?

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in Employment Law,Human Resources

Q. My company uses a time clock to track the hours of nonexempt employees. When we determine the wages to be paid to employees, can we round up or down to the nearest five-minute increment?

A. Neither the Fair Labor Standards Act (FLSA) nor California law requires employers to use a time clock. However, they must keep accurate records of the hours worked by nonexempt employees in some permanent form.

For purposes of 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-hour.

However, the rounding should balance out over time, so it doesn’t always favor the employer. That is, em­­ployers must ensure that their rounding practices do not always result in employees not being paid for time that they actually worked. For example, if an employer rounds to the nearest five minutes, it should either:

  • Always round in favor of the worker, or
  • Alternate between rounding back to the previous five-minute mark for a worker’s starting or stopping time and rounding forward in the alternative situation.

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