Here’s the scenario: everyday you arrive to work early to make sure you have enough time to park, put your coat and lunch away, and get in line to punch-in at the time clock. But how are you rewarded for this early arrival? Your employer rounds your early punch-in up to your start time anyway – your employer essentially steals these minutes from you and gets free work. If this scenario sounds familiar, your employer is likely reaping the benefits of free work from all the employees that clock-in early. This could be a major violation of the Fair Labor Standards Act (FLSA), including potential minimum wage and overtime violations. Our employment law attorneys provide specifics herein.
Can an employer use a rounding policy if my time worked is tracked using a time clock?
Technically, Yes. But it must comply with the FLSA and state law.
If you are paid by the hour and you are required to clock in and out at the beginning and end of your shifts using a time clock, then your time worked may be subject to a rounding policy. If such a policy is used, your actual start and end times recorded on the time clock are rounded to the nearest five minutes, one-tenth, or one-quarter of an hour. While rounding policies for hourly-paid employees are generally permitted under the Fair Labor Standards Act, they are subject to certain rules and regulations in place to ensure the employee is paid for all their time worked.
What kind of rounding policies are permissible?
The FLSA generally permits the use of rounding policies for hourly-paid employees who clock in and out for their shifts using a time clock. Rounding practices have been used for many years, and these practices were created to ensure that, over time, employees are fully compensated for all time worked. These practices assume that some employees could arrive a few minutes early and other employees a few minutes late for their shift, and they are designed to account for minor differences in shift start and end times.
Rounding policies that uniformly round to the same time interval are permissible under the FLSA. Approved time intervals include the nearest five minutes, tenth of an hour, or quarter of an hour. The below example represents a permissible rounding policy:
Bob is paid by the hour and uses a time clock to record his time worked. Bob’s company uses a rounding policy that rounds Bob’s clock-in and clock-out times to the nearest tenth of an hour. Bob clocks in for his 8:00am shift at 7:58am. Bob’s shift ends at 5:00pm, and he clocks out at 4:59pm.
Actual time worked = 7:58am–4:59pm
Rounded time recorded = 8:00am–5:00pm
What kind of rounding policies are NOT permissible?
Although rounding policies are permitted in certain circumstances, this does entitle employers to round employees’ time worked in any manner they choose. If a rounding policy results in systematic underpayment over time, it fails to compensate employees for all time worked. In other words, if the employer consistently benefits from the rounding policy, while the employee consistently loses time worked, then the rounding policy violates the FLSA. The following rounding methods are impermissible:
1. Rounding practice results in a failure to compensate employees for all time worked
To determine if a rounding practice is unlawful, the net effect of the rounding practice is looked at for the group of employees, not on an individual basis. Two approaches are generally used: (1) compare all rounded punches with the actual punch times to determine the overall net effect — in hours, minutes, and/or seconds — of the rounding; and (2) compare the percentage of employees for whom the rounding resulted in a net loss of time — those who were undercompensated — with the percentage of employees for whom the rounding resulted in overcompensation.
If the net effect of the policy clearly favors the employer, then the rounding practice violates the law. In addition, Courts have held that if 53.5% of employees are losing time, the policy could violate the law. See more on our current case against Ohio State University Wexner Medical Center below.
2. Rounding policies that use multiple or arbitrary rounding increments
A rounding policy must round the same way for every clock-in and clock-out punch. In other words, an employer must pick a permissible time increment (either the nearest five minutes, tenth of an hour, or quarter of an hour), and stick with it. An employer may not utilize an arbitrary time increment or use multiple time increments at once:
Arbitrary Time Increment: Sarah’s employer rounds her clock-in and clock-out punches to the nearest half hour. Sarah clocks in at 8:14am, which rounds down to 8:00am. This is impermissible.
Multiple Time Increments: Dave’s employer rounds his clock-in punch to the nearest quarter of an hour and his clock-out punch to the nearest tenth of an hour. This policy uses multiple time increments, so it is impermissible.
3. Rounding policies that aren’t accurately reflected in the employee’s pay
The rounding increment used must mirror the total time the employee is paid for. For example, if an employer rounds time to the nearest tenth of an hour, and an employee clocks in for her 8:00am shift at 7:54am, she has worked one tenth of an hour (six minutes) before her scheduled start time. A 7:54am clock punch, when using a policy that rounds to the nearest tenth of an hour, properly rounds to the same time: 7:54am. If the employee is not paid until her start time of 8:00am, then her pay is not consistent with the rounding policy because she is missing six minutes of pay she is owed under the rounding policy.
Each situation is different, and a thorough review of the facts may be required to determine if your employer’s rounding policy is permissible under the FLSA. If you believe you are not being properly compensated for all your time worked, or if you have other questions about your wages or employment, please reach out for a free consultation.
Current Rounding Cases: Oakley et al. v. Ohio State University Wexner Medical Center. Case No. 2017-00845, Ohio Court of Claims
We currently have a rounding case against Ohio State University Wexner Medical Center (OSUWMC) for its rounding practice. The complaint alleges that OSUWMC’s rounding practice results in a failure to pay employees for all time worked. The potential class consists of more than 22,000 employees across all of OSUWMC’s facilities. Based on the records of approximately 375 individuals whose time records were obtained and analyzed, the rounding practice has resulted in the net loss of more than 231,000 minutes! And the records show that approximately 80% of employees are losing time.
To date, more than 180 individuals have joined the lawsuit. If you worked at OSUWMC and were subject to the rounding practice, contact us to see you qualify for the lawsuit.
Employment Attorneys in Columbus, Ohio
 See 29 C.F.R. § 785.48(b).