In a recently released Opinion Letter, the U.S. Department of Labor addressed the practice of rounding when tracking employee’s time for purposes of payroll. In doing so, the DOL confirmed that rounding is a permissible method of timekeeping when implemented in such a way that is will not result in an underpayment over time.
In reaching this opinion, the DOL acknowledged that it is common and acceptable for employers to round time in determining an employee’s hours worked. However, the DOL specified that by doing so employers have to make sure that rounding “will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked*.”
The DOL has accepted rounding to the nearest five minutes, one-tenth of an hour, one-quarter of an hour, or one-half hour as where the rounding averages out so that the employees are compensated for all the time they have actually worked. SMACNA generally recommends not rounding to more than a quarter hour as a matter of best practice.
In the quarter hour scenario, employee time from one to seven minutes may be rounded down, and not counted as hours worked, but employee time from eight to 14 minutes must be rounded up and counted as a quarter hour of work time**.
Additionally, SMACNA advises that contractors who use rounding be cautious in their approach. The courts have ruled in favor of employees where rounding policies worked only to the employer's advantage or failed to average out over time. Note that a contractor runs the risk of violating the Fair Labor Standards Act requirements if the employer always rounds down.
Lastly, contractors using a rounding method should ensure they are complying with their state law as well as any existing rules in their collective bargaining agreement with regard to how time will be tracked.
*29 C.F.R. § 785.48(b); WHD Opinion Letter, 1994 WL 1004879 (Nov. 7, 1994); see also Corbin v. Time Warner Entm’t-Advance/Newhouse P’ship, 821 F.3d 1069, 1077-79 (9th Cir. 2016) (upholding a policy of rounding to the nearest quarter hour, which was “neutral on its face and as applied” to the plaintiff-employee over several pay periods).
** See Regulations 29 CFR 785.48(b).