Timesheet Rounding: Why You Shouldn't Round Employee Punches

Is your organization still rounding employee punches to the nearest 15-minute mark on timesheets? Do you allow employees to manually enter their time on a time card or spreadsheet, resulting in estimations and approximations? If you answered yes to either of these questions, you’re likely paying much more for employee wages, overtime, and lost productivity each and every pay period. With the technology and affordable tools available today, you will want to strongly consider using an automated online time and attendance platform that will conveniently track employee time to the exact minute (no more rounding), eliminating countless hours of overpaid minutes.

Make Staying Compliant Easier

Are employers allowed to round employee time? While many states have additional guidelines beyond those at the federal level, the Fair Labor Standards Act (FLSA) does legally allow for punch rounding as long as it meets certain criteria. One of the main contingencies with rounding rules is that they cannot favor the employer. The policy must either be neutral or favor the employee. Some business owners still use manual processes to track their employees’ time, which is the primary reason why the DOL allows timesheet rounding. However, with the tools and resources available to organizations today, rounding shouldn’t be the preferred option. The Department of Labor can request an audit of your company at any time and you want to make sure you are staying compliant.

Good timekeeping practices help comply with the FLSA’s requirements. According to the FLSA, you are required to maintain the following records for nonexempt employees:

1. Employee's name and social security number
2. Full address
3. Birthdate
4. Sex and occupation
5. Time and day of week when work-week begins
6. Hours worked each day
7. Total hours worked each week
8. How the employee is paid (e.g., per hour, per week, salary)
9. Hourly pay rate
10. Total daily or weekly straight-time earnings
11. Overtime earnings each week
12. Payroll deductions or additions from wages
13. Total wages paid each pay period
14. Date of payment and pay period covered by payment

Employers are able to use any timekeeping method they choose such as a biometric time clock, time clock app (Dominion has one on the way, read more here), or mobile/PC punching. Any timekeeping plan is acceptable as long as it is complete and accurate.

Not all timekeeping methods are good for your business. Check out our infographic to see some statistics and determine which method is best for you.

Some employers track employee hours worked in 15-minute increments, and the FLSA allows an employer to round employee time to the nearest quarter hour. However, an employer may violate the FLSA minimum wage and overtime pay requirements if the employer always rounds down. Employee time from 1 to 7 minutes may be rounded down, and thus not counted as hours worked, but employee time from 8 to 14 minutes must be rounded up and counted as a quarter hour of work time.
— Department of Labor

Save the Employer Money

If you manually calculate the hours on time cards, it certainly saves you time if you round punches, but then you run into the problem of employees questioning your manual calculations. “Did you round my time accurately?” “Did you round illegally to the employer's advantage?” As the employer, you will save money by not rounding your employee punches. Smart employees may figure out the ideal times to clock in and clock out to get the most out of their punches in the least amount of actual time spent on the clock. See example below. To eliminate employees cheating the timekeeping system, remove the punch rounding option to record exact punch times. This will also minimize employee questioning and perfect accuracy.

Read how Time & Attendance software can help your business grow.

A Costly Example in Punch Rounding

To demonstrate the steep cost of allowing for employee punch rounding, consider the following example from 941 Timekeeping. An employee arrives as usual at 8:05 am (recorded as 8:00 am). Having been an employee for some time, he knows he has up to 7 minutes to arrive late before he’ll actually be marked as late. For the lunch hour, the employee leaves at 11:55 am to get an early start on the lunch rush (recorded as 12:00 pm). He returns after lunch a few minutes late, getting caught up in traffic to arrive at 12:34 pm (recorded as 12:30 pm). Seemingly, this is “not a big deal.” And finally, after a long day of work, he leaves at 4:56 pm (recorded as 5:00 pm) to get ahead of evening traffic. In this very typical example, the employee has been paid for 18 minutes of additional work in a single day. Feasibly, the employee could have been paid as many as 28 minutes extra if he had “taken full advantage” of the 7-minute grace period.

Now let’s say we have 20 employees following the same practice. 18 minutes multiplied by 20 is 360 minutes or 6 hours of overpaying and/or lost productivity per day. Now let’s multiply this by a typical 21-day work month. That’s 7,560 minutes or 126 hours of overpaying and/or lost productivity each month. At $15 per hour, that’s $1,890 in lost wages… per month. Fortunately, fixing this problem with an automated online time and labor solution would only cost a fraction of that amount each month!

Dominion’s Time & Attendance Software

If you’re still rounding employee times or permitting employees to enter their times manually on a timesheet, it’s time to take control of that cost. With the right tools and resources such as time clocks, IP Address lockout feature, and mobile punching with no rounding rules, you’ll be able to collect 100% accurate time and attendance data. Dominion’s Time & Attendance software does have a user-friendly rounding feature where you can customize the rounding rules to fit your business’ needs. The rounding rules affect the employee’s punches and the exceptions that are presented to the supervisor. Each option can be set to define a period of time to round using a period within so many minutes. Even if you don’t want to round punches, which is preferable, you can relax knowing the data will be stored accurate and available to view at any given time through our cloud-based software. It’s a win for the employees too if you don't round; they get paid for every second of the hard work they do.

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