Why Rounding Your Employees’ Hours can Get You In Trouble
We occasionally get questions about rounding off employee time entries, primarily for use in calculating attendance or payroll. Most inquiries come from customers who use either the locked in-out method or punch card module in our Web TimeSheets.
In most real-time systems, when users enter their start and stop times, the system captures the exact times and easily calculates a daily/weekly/monthly total. Rounding is largely unnecessary in time tracking software because no manual additions are performed offline, unlike with old paper punch cards.
If rounding is required, it is best to round up to the nearest time increment, in the employee’s favor.
This is a common Best Practice for employee time tracking. It can help protect your company. Here is additional information:
Rounding can also create extra work, instill uncertainty and doubt regarding employee time totals, and open companies to litigation. Here are some pitfalls to avoid:
- Historical inertia: “We’ve always done it this way.”
- Unfair practice of rounding to save money.
- Potential auditing concerns.
When companies use manual methods or proprietary formulas for rounding the amount of time worked, it opens them up to up to potential litigation. See this article about what the U.S. Department of Labor expects in calculating work time.
Litigation usually revolves around interpretations of the Fair Labor Standards Act (FLSA), which states that nonexempt employees should be paid for every minute worked, as long as the rounding is non-biased in one direction or another. Here is an article about how this works.
And payroll processor ADP cites rounding as one of the three most common violations to avoid.
That being said, Replicon Software can support companies that have rounding policies.
