An employer may violate the Fair Labor Standards Act (FLSA) by rounding employee time, if the employer always rounds down, resulting in the time always going against the employee.
Many employers have a practice of rounding employees' start and stop times to the nearest 5 minutes. This type of rounding is acceptable so long as it is used in such a manner that it will not result in failure to compensate employees, over a period of time, for all of the time that they have worked.
The Department of Labor has stated that rounding time in 15 minute increments is acceptable and that employee time from 1 to 7 minutes may be rounded down, and not counted as hours worked, so long as employee time from 8 to 14 minutes is rounded up and counted as a quarter hour of work time and the employee is paid for the time.
A common FLSA violation associated with rounding time occurs when employers have a policy and/or practice of paying employees from the start time of their scheduled shift to the end time of their scheduled shift, rather than from the time they actually start working to the time they actually stop working. In many instances the payroll system is set up to default to the scheduled times rather than the employees' respective clocked times. This type of practice is common in factory settings and might be a violation of the FLSA, if the system is set up to always round down.
For example, if an employer docks employees for 15 minutes when they start their shifts more than 7 minutes after the start of their scheduled shift, but also rounds the employee time to the scheduled shift start time if the employee starts working 8 minutes early or works 8 minutes late.
If an employee is scheduled to work from 8:00 am to 4:30 pm Monday through Friday, with a 30-minute lunch break, but the employee clocks in and begins work 10 minutes early each day and clocks out 7 minutes late each day, but the employer rounds the employee's time to 8 hours each day, this would also be a violation of the FLSA. An employee would be entitled to overtime pay for the additional 1.25 hours of work each week.
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