Round away! But, wait! Do you really know the rules?
Employee time rounding is a necessary and essential part of any business, especially one that employs workers with hourly shifts. It involves determining pay for hourly employees based on when they clock in and out. If an employee’s shift begins at 6:00 pm, for example, and he or she clocks in five minutes early, that time can be rounded up. The Department of Labor, under the Fair Labor Standards Act (FLSA), permits rounding of employee time either to the nearest five minutes, one-tenth or quarter hour. So, it is important to remember that ignoring the laws can lead to costly fines for unpaid compensation due to any employee.
Typically with time and attendance systems, employers have the option of setting the rounding increments, as long as it stays within the boundaries of state and federal labor laws. If a shift begins at a 9:00 am, and it is within the bounds to round to 9:00 if employees clock in within five minutes before or after the start of their shift. This allows for proper compensation – despite delays that may occur at a clocking station.
Secondly, employers have the option to round hours to days as well. There can be an established definition of overtime hours – as well as holidays. For example, if an overnight shift stretches from Friday night into Saturday morning, do the Saturday morning hours require overtime pay or not?
This sort of standardized rounding criterion allows for setting holiday hours, which can override overtime including Saturday and Sunday shifts. Time and attendance systems will allow payroll to easily categorize hours worked, separating hours that were worked under normal time from those which occurred during overtime hours.
This also allows further fine-tuning with advanced employee time rounding. Here, employers can automatically add time to shifts and calculate defined break periods. Allowing time for employee meals and breaks is required by law, and advanced time rounding allows you to automatically deduct the 30 minutes typically allotted for this, although each state may differ in its exact requirements.
Time rounding is considered acceptable practice and one that is absolutely necessary, especially for large companies with many hourly employees that are clocking in and out at simultaneous times. It is not about paying employees for extra time or taking away time earned, but the more pressing issue is ensuring that all employees are paid accurately for the time that they have worked. Although it can be sometimes be viewed as suspicious amongst employees, keeping clear and consistent policies that align with the FLSA means there is no need to fear litigation.
So, round with full confidence…and knowledge!
