WHAT ARE THE TRUE “SAVINGS” OF TIME CLOCK ROUNDING?

timeclockAlthough there is no Nevada law regarding time clock rounding the Office of the Labor Commissioner recently conducted a thorough review of statutes, regulations and case law. The Nevada Labor Commissioner issued an Advisory Opinion that time clock rounding can be appropriate as long as, over time, the employee is properly compensated for all time actually worked.

The practice of time clock rounding has been around a long time. If you are an employer that currently uses this practice, beware. There has been a significant increase in lawsuits filed by employees under the federal Fair Labor Standards Act (“FSLA”). The federal regulation on time clock rounding states, “It has been found in some industries, particularly when time clocks are used, there has been the practice for many years of recording the employees’ starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually worked. For enforcement purposes this practice in computing work time will be accepted provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” (29 C.F.R. § 785.48(b)) If you are an employer that believes changing its practice of time clock rounding will cost you money, you could be at risk for a lawsuit.

The Department of Labor (“DOL”) does not prevent employees from suing over rounding. It is uncertain during the course of an investigation, the rounding will show in the employee’s or the employer’s favor. If an employer uses a payroll software program or a computerized timekeeping system that can easily track all time with no rounding, the benefit the employer may receive from rounding does not out weight the risk of a lawsuit.

If you are an employer that does round time, do so consistently and in a manner clear in your record-keeping.  Make sure you state the method clearly in your employment policies and apply it equally to all employees. It will make you less vulnerable to a FLSA claim or lawsuit.  Always check with your attorney before changing any time keeping practices to prevent any issues under FLSA’s requirements.

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