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How to Implement a Time Clock Rounding System

Time Clock Rounding
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Time clock rounding is a common practice where the employer rounds their employee’s hours worked. It helps to simplify the payroll process. For example, if your employee clocks in at 9:01 am and clocks out at 5:02 pm, a time clock system may round their start time to 9 am and their end time to 5 pm.  


Is Time Clock Rounding Legal?

Time clock rounding is legal according to the Fair Labor Standards Act (FLSA) as long as these rules are followed by the employer:

  1. It is legal as long as over a period of time it does not fail to compensate the employees. 
  2. An employer’s time rounding practices cannot benefit the employer. It has to be neutral or favor the employee.

Nonexempt employees must be paid for all hours worked in a workweek. Hours worked includes the time the employee must be on duty and on the employer premises or any other approved place of work.

The maximum amount of rounding time is 15 minutes. However, if an employee works overtime by 10 minutes, you must pay them for those 10 minutes. The failure to count all hours worked will result in an overtimeviolation if you do not pay them earned overtime. 

When rounding up or down for an employee, it is important that you don’t underpay your employees. Make sure you train your staff on how your system will work so that they will not be left wondering why their time looks different. 

Employers must use caution when rounding time. The courts have ruled in favor of employees where the employer’s rounding policy worked to the employer’s advantage or failed to average out over time. Ensure your attendance policy is up to date as well. An employer’s attendance policy may impact whether its rounding policy is lawful. 


What Are the State Laws? 

Many states follow federal law. However, it is important to research your state as laws change regularly. For instance, while Washington specifically follows the federal policy allowing employers to round on timecards, this practice is prohibited in the state for meal and rest period calculations.

California employers are also prohibited from rounding time-clock punches for employee meal periods. They must receive a 30-minute unpaid meal break every 5 hours they work. 

Research your state so that you follow the time clock rules. 



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How Does Time Clock Rounding Work?

To be compliant, you must follow one of the three rounding rules approved by the FLSA. 

You can round by 15 minutes, 6 minutes, or 5 minutes. 


15-minute Time Clock Rounding

As discussed above, the maximum rounding amount under federal law is 15 minutes. You must round by the 7-minute mark and round down your employee’s time from 1-7 minutes. You round up from 8-15 minutes. 

Example: 

If your employee clocks in at 8:07am, the time would be rounded to 8:00 am. If your employee clocked out at 5:38pm, their time would be rounded to 5:45 pm. 

An easier way to think of this is:

Minutes after the hourRound to:
8:00am – 8:07am8:00am
8:08am – 8:22am8:15am
8:23 am – 8:37am8:30am
8:38 am – 8:52am8:45am
8:53am – 8:59am9:00am


6-minute Time Clock Rounding

For 6-minute increments, the time clock rounding rules stick to 1/10th of an hour. Each time is an increment of 6 minutes. 

Minutes after the hourRound to:
7:58am – 8:03am8:00am
8:04am – 8:09am8:06am
8:10 am – 8:15am8:12am
8:16 am – 8:21am8:18am
8:22am – 8:27am8:24am
8:28am – 8:33am8:30am
8:34am – 8:39am8:36am
8:40am – 8:45am8:42am
8:46am – 8:51am8:48am
8:52am – 8:57am8:54am


5-minute Time Clock Rounding

The 5-minute increment is split at 2 ½ minutes. You will round 2 minutes up or down. 

Minutes after the hourRound to:
7:58am – 8:02am8:00am
8:03am – 8:07am8:05am
8:08 am – 8:12am8:10am
8:13 am – 8:17am8:15am
8:18am – 8:22am8:20am
8:23am – 8:27am8:25am
8:28am – 8:32am8:30am
8:33am – 8:37am8:35am
8:38am – 8:42am8:40am
8:43am – 8:47am8:45am
8:48am – 8:52am8:50am
8:53am – 8:57am8:55am


What Are the Benefits of Time Clock Rounding?

  • Time clock rounding can make payroll calculations easier particularly if you are not using an automated payroll system. 
  • It can help to prevent time clock theft. Employees who continuously clock in early or late five minutes a day will add up. 
  • Time clock rounding can also help you calculate billable hours for a client. If you work for a client and you are rounding your time using the same rules, your time can help calculate payment easier.
  • Rounding is practical with an automated time clock system that calculates the overtime based on the rules outlined by the Department of Labor. By using a time clock system such as ezClocker, you can customize your time at 5-minute, 6-minute, or 15-minute increments. 


Implement a Timekeeping Policy

Managing time clock rules and your employee’s time correctly is important for your small business. Employees should know you take time record accuracy seriously. You want to ensure they are compensated fairly. Once you have reviewed and decided on your time clock rounding rules, you should include them in your timekeeping policy.

Your policy should also prohibit nonexempt employees from working off the clock, falsifying time records, and clocking in and out for co-workers. 

Nonexempt employees should also be prohibited from performing work outside of normal working hours without prior approval. This rule should also include a ban on the after-hours use of employer cell phones. 

Finally, your managers should enforce all policies. Your policy should state that failure to follow these policies will result in disciplinary action. 


How to Implement Time Clock Rounding 

  • Research your state laws to ensure you are compliant. 
  • Don’t underpay your employees due to rounding practices, as this is considered wage theft.
  • Using an automated time clock system as stated above will help. It is easy to customize your set increments allowed by law. 
  • Implement a timekeeping policy.
  • It is important to train and communicate with your entire staff how it works. They should know and understand the system.  Make sure they know what your payroll rounding rules are. Be transparent with your intentions and why you are implementing this system. How will this benefit your employees? Clearly show them how you will frequently audit records to ensure it will not take away time from them. 
  • Follow all rules established by the FLSA. 
  • Audit your employee records frequently (e.g., quarterly). Ensure no one is ever shorted on time when auditing. 


Final Thoughts on Time Clock Rounding

Time clock rounding is a great system to implement for your small business. If you are using physical timecards to punch in, time clock rounding may not be in your best interest. However, using an automated time tracker and scheduling software makes it easy to do.

You can customize your time clock rules with the increments you prefer. Also, your employees and managers will have the data and information available to them immediately. If an employee has a question about how their time was calculated, it will be easy to explain when they have all the information. 

Once you implement time clock rounding, audit frequently and analyze your time keeping policies and practices. Getting your employees on board is easier if you are upfront with your intentions and your practices. 


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Author: Kimberley Kay Travis

Kim Travis, co-owner of Travis and Adams Consulting Group, has over 20 years’ experience in human resources and leadership roles. She has specialized knowledge in employment law, employee relations, recruiting, management consulting, leadership development, manufacturing safety programs, and writing business articles and blogs.

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