• “Rounding” of timecards is permitted as long as the average of the actual number of working hours is achieved.
• By disregarding time, employers run the risk of “shorting” employees or attempting to avoid paying overtime.

Fair Labor Standards Act (FLSA) regulations discuss the “rounding” of timecards. Here is the applicable paragraph:

29 CFR 785.48 Use of time clocks — (b) Rounding practices. It has been found that in some industries, particularly where time clocks are used, there has been the practice for many years of recording the employees’ starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. For enforcement purposes this practice of computing working time will be accepted, provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.

This regulation says rounding is allowed as long as it averages out to the actual number of working hours. However, if rounding is only done to the “disadvantage” of the employee, it would not be legal because it would result in paying the employee for fewer hours than the employee worked.

For example, employers might use a “seven-minute” rule, where a time punch within seven minutes of the nearest quarter-hour is rounded to the nearest interval, whether down or up. Thus, if an employee punches in at 7:54 a.m. and punches out at 5:12 p.m., that worker would be paid from 8:00 to 5:15 (rounding down and up in each case).

If the timecard was rounded down in this example (ending at 5:00), the employee would be “shorted” 15 minutes of pay. Of course, this assumes the employee worked during that time. If the employee finished working at 5:02 but simply didn’t punch out for another 10 minutes, the employer does not have to pay for that time. However, the late punch-out should not be rounded down, but instead the employee should be required to initial a timecard change.

Disregarding time

The sad fact is that some employees arrive early (or even on time), punch in, but don’t begin working right away. Although this time can be disregarded, the regulation warns that employer’s records should reflect hours worked as accurately as possible. Regular changes to timecards may create the impression that the company is shorting the employees or unlawfully trying to avoid paying overtime.

Early or late punching (or loitering) is a disciplinary issue, not a rounding issue. Employees can be told that if they are clocked in, they are expected to be working. They can be disciplined or terminated for falsifying timecards (knowingly punching in without intending to work) or for wasting time when they should be working.

For example, if two employees arrive early, punch in at 7:46 (which would normally be rounded to 7:45) but then stand around until 8:00 talking about a recent sporting event, the employer could speak to them about removing the extra minutes from their timecards. If they would have punched in at 7:59 (or did not start working until then), this corrected starting time would be rounded to 8:00.

The issue of whether work was performed is critical because employers cannot refuse to pay for services. Employers cannot “sit back and accept the benefits” of an employee’s labor without compensating for the time. If an employer does not want employees to work, the organization must actively enforce rules against doing so.

In other words, if employees arrive early and start working (and even incur overtime) that time must be paid. It cannot be rounded off or disregarded because only non-working time can be disregarded. Even then, the rule for disregarding time is limited to early or late punching. For example, employees who stand around talking in the middle of the workday cannot normally have this time excluded. The one exception might be if this was an unauthorized extension of a normal rest period.