Timekeeping Trap: Be Careful When “Rounding” an Employee’s Work Time

The Fair Labor Standards Act (FLSA) regulations do not require an employer to track and pay an employee for the exact number of minutes they actually work. As currently written, the regulations will permit employers to round up or down to the nearest 5-, 6- or 15-minute intervals, whichever your company chooses. For example, if your company chooses to round an employee’s work time on a 15-minute interval basis, it could not “round up” for an employee who is four minutes late. It could only do so, if the employee were more than 7.5 minutes late. However, this rounding practice is increasingly becoming a subject of FLSA litigation.

The specific FLSA regulation reads as follows, in pertinent part:

Presumably, this [rounding] 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. (29 CFR 785.48. Emphasis added.)

Plaintiffs’ attorneys are using the section of the regulations bolded and underlined above as the basis for legal action against employers. If they are able show that over a period of time that the rounding practices always favor the employer, employees may be able to recover large amounts of money.

Accordingly, employers should consider reviewing their timekeeping practices and records to ensure that employees are being compensated for all hours worked. Employers may also want to consider eliminating the rounding practice all together. The technology currently exists to precisely keep track of employees’ work time. Such precise records would eliminate the risk of FLSA rounding litigation completely. If your company does not possess this technology, you may want to consider rounding to the smallest increment of time possible. This can help minimize the risk of this costly litigation.