So How Does Timeclock Rounding Work?

As you know, California law requires employers to keep accurate records of hours their employees work — but that doesn’t necessarily mean employers must track employee time down to the minute. There is a process called “Rounding” that allows employers to round employee punches to the nearest 1, 5, 6 or 15-minute mark. This law has gone back and forth in the courts for a couple years, so now it has settled. We’ll give you the quick facts, so you can decide if it might work in your company.

The Division of Labor Standards Enforcement (DLSE) states that employers may round employee hours to the nearest 5 minutes, 6 minutes (one-tenth of an hour), or 15 minutes (one-quarter of an hour), as long as the rounding policy is fair and works both in the employee’s and the employer’s favor.

However, several years ago, California ruled in case against See’s Candy, that only an employer’s policy of rounding employee time to the nearest 6-minute mark was lawful. A federal case after that confirmed the 15-minute rounding rule was valid, but California was still held to the 6-minute rule. Now, another court has expanded on the See’s Candy ruling, finding that rounding to one-quarter of an hour also complies with California law — even if the policy occasionally shortchanges some employees.

So which way is up and how does it affect me?

Rounding Pros and Cons
If you use an electronic timekeeping system, you can set a rounding policy in place that basically gives employees a “grace” period, so if they clock in a couple minutes late, the time rounds back to the hour, and subsequently, if they clock in early, it rounds up to the nearest hour, so they are not paid for that extra time.

This can be beneficial to both employees and employers and it gives everyone a little flexibility, so they aren’t held to punching in exactly when they are supposed to and may avoid unintentional overtime.

However, some employees may take advantage of longer grace periods, like the 15-minute rounding plan, and show up late, leave early and erase any benefit to the employer.

If You Round, Make a Plan
How much of a rounding you decide to utilize depends on the variables of your business and it’s best to get as much advice as you can, not only from an HR expert, but even from your employees so you set up the best scenario for all concerned.

With any electronic timekeeping system, it’s wise to audit your employee’s punches to be sure they are not clocking in early for lunch or obtaining unwarranted overtime.

And, with a rounding policy, you want to be sure the outcome is as neutral as possible, that both you and your employees benefit from the policy, but also that you both lose occasionally.

Infinium HR can help you plan, develop and implement a policy that works for you, and all out timekeeping systems will allow customization any rounding rule you settle on. We’re here to help!