Time Rounding is a practice that doesn’t add up for employers.
Although the FLSA permits you to round your employees’ time to the nearest quarter hour, that doesn’t mean it’s a good idea.
If your company is rounding time, why do you do it? Do you think it’s more convenient? Or is it because that’s how you’ve always done it, and changing now would be a pain? Well, here are a few facts for you to consider regarding the downside of rounding:
Rounding puts you at greater compliance risk
According to the FLSA, when rounding is based on 15-minute increments, employee time from 1-7 minutes may be rounded down, but time from 8-14 minutes must be rounded up. In recent years, employers’ rounding practices have become a frequent basis of labor lawsuits, including class action suits. Why incur the extra headaches and risk?
Rounding may result in greater overtime costs
If rounding up causes an employee to cross into overtime hours, employers are required to pay the employee’s overtime rate. So rounding can result in expensive, unintended consequences.
Rounding doesn’t serve any purpose
Rounding is a labor practice that dates back to when employees had to wait in line to be manually clocked in by clerks. It made sense back then. But with automated time and labor management systems easily capturing exact clock-in times, there’s no need for it now.
Accuracy saves employers money
Accuracy is a key tool in lowering administrative and payroll costs. It allows employers to pinpoint workforce trends, identify potential compliance issues quickly, and even serve customers better. It ensures employers only pay for actual hours worked, and all companies benefit from running a tight ship.
Anecdotally, when companies implement automated time-tracking systems, one of the first places they see dramatic savings is via the switch from rounding to precise time-punches.
Why pay a penny more than you owe?
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