July 01, 2019
What Goes ‘Round Comes ‘Round
Many and perhaps most employers use a practice of rounding time worked. For example, if an employee punches in at 8 minutes past the hour, the employer rounds that to ten minutes late. That begs the question, what increments are permissible under the Fair Labor Standards Act (FLSA)? The U.S. Department of Labor (DOL) issued an opinion letter on July 1, 2019 answering that question.
The letter advises that rounding in increments of as much as one-half hour may be permissible. A key is ensuring the rounding policy or practice is neutral on its face. Also, it should not “result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.”
But how is a policy neutral on its face? If the policy or practice was to always round up to the next increment of ten minutes, that might not be neutral. It would regularly work to the employee’s detriment. Imagine the employee clocks in at 1 minute after the start of the shift. Then that is rounded up to the next ten minutes increment. The employee would lose ten minutes of paid time. If that happened with some frequency, that could quickly add up. The employer might have the same result if it rounded down when an employee clocked out early.
Courts have ruled that an employer does not violate the FLSA where a failure to pay an employee for time worked is “de minimis.” But how small is that? One court found, “working time amounting to $1 of additional compensation a week is ‘not a trivial matter to a workingman,’ and was not de minimis.” Another held, “10 minutes a day is not de minimis.”
Periodically audit your payroll records. Find the net results of your rounding practices. Then compare your findings to the guidance above. If the net result is more, re-evaluate your rounding practices. Also, consult with your company’s employment counsel before you conduct the audit.