How to Avoid Time Rounding Penalties When Rounding Employee Hours
Rounding employee time is a common practice when you don’t have an automated time and attendance system in place. If you round employee hours, you need to understand the Federal Department of Labor’s regulations around rounding employee hours.
Federal Labor Law for Rounding Employee Timesheet Hours
Under Federal Labor Law, employers have the option to round employee hours by the quarter hour, 1/10th of an hour, or in 5-minute increments.
- If rounding the quarter hour, it is split by the 7 1/2 minute. Therefore, if an employee clocks in between 8:53 and 9:07 it will be recorded as a 9:00 punch.
- If rounding by the 10th of an hour, it will be split by 3 minutes. So, if an employee clocks in between 8:57 and 9:03 it will be recorded as a 9:00 punch.
- If rounding by 5 minute increments, it will split at the 2 ½ minute. Thus, if an employee clocks in between 8:58 and 9:02 it will be recorded as a 9:00 punch.
It is imperative that if an employer rounds up for early clock ins, they also round up for early clock outs, so that rounding is not simply benefiting the employer.
Penalties for Rounding Employee Hours Without Following the Rules
Not following the Federal Department of Labor’s rules for rounding employee time can be expensive.
There are numerous penalties that an employer can incur if an employee is not paid for all of the time they work.
- $100 compensation per employee per pay period of unpaid time
- Payment of unpaid wages
- Attorney fees
Overtime Resulting from Rounding Timesheet Hours
Don’t let time rounding cause your employees to go into overtime.
Employers should also be aware of whether or not time rounding is causing an employee to enter into overtime. An employee is entitled to overtime for every hour over 40 hours of work. If an employee clocks in minutes early and clocks out minutes late every day, rounding up can cause the timesheet to reflect that an employee has worked more than 40 hours. In order to prevent this from happening an employer should have policies that include discipline for clock-in and out violations, other than docking pay.
Does Rounding Employee Hours Help Save Money?
While the Department of Labor allows for a certain level of inconsistency with time tracking methods, this doesn’t mean that employers can exploit employee hour rounding to cut costs. In fact, if businesses are saving a lot of money due to rounding employee timesheet hours, chances are they are doing something illegal, and are subsequently opening themselves up to Fair Labor Standards Act (FLSA) lawsuits.
Ultimately, you’ll be able to adhere to labor laws while accurately tracking employee time if you practice rounding timesheet hours according to the rules in place.
EPAY Time & Labor can help you avoid legal fees for employee time rounding and manage overtime costs.
With our cloud based time and attendance system you can pay employees for the exact time they work, without the hassle. You also have constant access and control over your employee scheduling, equipped with overtime alerts.