Rounding of Time

Employers round up time to account for any mismatched minutes or seconds of their employees’ clocked hours and streamline payroll calculations.

Is Time Rounding Legal?

According to the US Department of Labor, time rounding is legal as long as it’s done correctly. There are three rules employers must adhere to to be in compliance with labor laws:

• Employers mustn’t round time in their favor. The company's rounding policy must be either in favor of the employees or neutral.
• The rounding of time cannot exceed 15 minutes.
• Employers must follow the seven-minute rule, which stipulates that employees who clock in before or at the seven-minute mark within a fifteen-minute window (e.g., at 8:07) will see their time rounded down to 8:00. If employees clock in after the seventh minute, their time will be rounded up to 8:15.

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Companies could be subject to a wage-and-hour grievance by their employees if they don't follow these three rules. Being fair to workers is the guiding principle that will determine the legality of the timesheet rounding as the federal framework rigorously protects workers' payment rights.

Why Do Employers Round up Time?

Time clock rounding simply means that the employee's actual work hours are increased or decreased by a set number of increments. Employers or managers can round up work hours depending on the industry and business type.

Companies can streamline the payroll process by using time clock rounding. It’s easier to calculate employee work hours if they clocked in for 8 hours rather than 7 hours and 58 minutes.

Rounding up time is also a great way to combat time theft and other occurrences in which employees can be paid for work they haven’t actually done. For example, rounding down the working time to eight hours when an employee clocks in for 8 hours and 2 minutes can make up for those extra minutes employees “steal” on their lunch break or when clocking in early for work on purpose.

However, this nickel-and-diming is not the main reason for rounding up work hours. It's more about simplifying payroll calculations than about counting breaks to the last minute, which borders on employee micromanagement.

What Are Some Time Rounding Methods?

Time rounding methods that comply with the Department of Labor and FLSA requirements come in different shapes and sizes. Every method can be applied in the same manner but may not be appropriate for every type of enterprise.

Time Rounding – 15 Minutes

Rounding up to 15 minutes (or 1/4 of an hour) involves two starting points indicating whether clock-ins or clock-outs are rounded up or down. For example, the first 7.5 minutes are always rounded down, while clocking in/out in the second 7.5 minutes is rounded to a quarter-hour.

Time Rounding – 5 Minutes

Similar to the 15-minutes method above, time rounding on the 5-minute interval is done every 5 minutes in two 2.5-minute segments. If employees punch in or out within the first 2.5 minutes, the time is rounded down. If employees clock in the latter half of the 5-minutes, their time is rounded to the closest 5-minutes.

Time Rounding – 1/10th of an Hour

Rounding down to 1/10th of a full hour requires 6-minute accruals or (6x10) divided into separate 3-minute time rounding intervals. Time is rounded down to three minutes following each 6-minute increment. In the opposite direction, the latter half is rounded up to 6 minutes.

Why Is Rounding Time Necessary?

Monthly or Weekly Payroll

Managing tiny portions of employee hours, such as a few minutes or seconds, can be challenging and cause unnecessary headaches for managers or HR. This is where rounding time comes in handy.

Billable Hours

Employers may also need to round down logged hours when calculating billable hours for clients. For example, sending out an invoice for 10 hours of work and 3 minutes is not practical. Business owners will usually use a rounded time measurement to bill their clients.

Early Clock-Ins

Timesheet rounding may be used by some businesses to stop employees from clocking in after the official start of work. This can be common for companies where the punching machine is in one place, but the workspaces for staff members are spread out over several locations. As a result, it is tempting for employees to check in earlier, then have coffee with their coworkers before heading to work.  

Many businesses still use analog time tracking methods such as punching time cards. This makes accurate logging difficult. Digital time-tracking software allows companies to track hours and minutes. Employers can create their own rules and time increments.