Timekeeping: What Is The 8-Minute Rounding Clock Rule?

An employee recently asked why their employer did not round up their timesheet to the nearest quarter hour of work. Sourcing a legal time clock rounding rule as part of the FLSA (Fair Labor Standards Act), here are a few things you may not know about the round up rule.

What is the FLSA 8-Minute Time Clock Rounding Rule?

Time clock rounding rules under the FLSA were started decades ago when mechanical time clocks or paper timecards were used to track employee work time. Employers would round a worker’s time to the nearest quarter hour, making the work time much easier to add for paychecks that were calculated by hand.

For example, if an employee were to clock in time at 7:52am, time clock rounding practices would give them a start time of 7:45am. However, if they were to start at 7:53am, the nearest rounded quarter hour would be 8:00am.

Although timekeeping systems have become more advanced over time, some employers still use this practice for calculating total clock entries. For example, an employee who clocks a total time of 7 hours and 5 minutes may only be paid for 7 hours based on rounding to the previous quarter hour.

But is it legal to only pay an employee for 7 hours of work time if an employee actually worked 5 minutes longer than what they were paid?

Is time clock rounding legal?

While there have been several case laws over the years where plaintiffs have challenged their individual payments that may have been impacted by rounding, the time clock rounding rule is still recognized as a legal federal law. However, the California Supreme Court may be reviewing this soon due to a 2022 legal case, and subsequent state laws may follow suit.

(As with any regulation, you should always review your local state law to determine if it supersedes federal law.)

Legal case challenging compensable time for 8-minute time clock rounding rule

In a 2022 case of Delmer Camp v. Home Depot U.S.A., Inc., two plaintiffs alleged that their employer, Home Depot, paid them less than the total amount of time reflected in their timekeeping system.

Questionable timesheet rounding

According to the case, Home Depot had been using a timekeeping system (Kronos) that calculated work time down to the minute but would round total employee hours. However, Home Depot contested that time clock rounding up or down would average out employees’ work time to be fully compensated and was “neutral on its face,” a phrase coined from a 2012 case of See’s Candy Shops, Inc. v. Superior Court (Pamela Silva).

How payroll calculations compared

To show its neutrality, Home Depot provided evidence that 56.6% of shifts reviewed paid employees the same or more than their actual work time. The remaining 44% of shifts showed employees lost minutes worked due to rounding. On average, there were 3.6 minutes gained with only 3.5 minutes lost, demonstrating that the rounding policy was neutral overall.

Was this employee time theft?

While the legality of time clock rounding was not contested in this case, the court then analyzed each plaintiff’s timecards. One of the plaintiffs had been overpaid due to rounding, so her appeal was abandoned. However, the other plaintiff was underpaid for 7.83 hours (470 minutes) over nearly five and a half years due to the time clock rounding policy.

Despite this being a small amount of unpaid work time (which Home Depot argued was “de minimis”), the Sixth Appellate District determined that in cases where an employer can capture the exact amount of time worked during a shift, the employee must be paid for all time worked.

Employee work hours matter

This ruling has since called into question the validity of rounding policies. In fact, the Sixth Appellate District Court has invited the California Supreme Court to “review the issue of neutral time rounding by employers and to provide guidance on the propriety of time rounding by employers.”

What if an employee clocks in before their shift?

When an employee clocks in before their set start time or lingers after closing time does not have to be paid unless they are doing actual work. However, contesting employee hours based on whether they were truly working while clocked in would be difficult to prove in court.

Best practice is to discuss and document this concern as a performance issue with employees who regularly remain clocked in while not working. Thorough documentation could help limit future offenses or support a subsequent termination if the behavior continues.

Key takeaways for timekeeping rounding

At the end of the day, employees must be paid for all time worked.

Employers who have implemented timekeeping systems that track compensable work time do not have an administrative need to utilize the outdated time clock rounding rule. Despite it still being legal under federal law, there is an overwhelming simplicity in modern workplaces to track time and calculate wages owed down to the minute, with no need to round.

For more information or questions about your specific scenario, please contact your certified HR expert. Not a current Stratus HR client? Book a free consultation and our team will contact you shortly.

Sources:
www.millernash.com
law.justia.com
casetext.com