Rounding Time Clock Practices: Is Your Employer Shorting Your Hours?

Imagine clocking in a few minutes early or ending your shift a few minutes late, only to discover those minutes never show up on your paycheck. Over weeks and months, these “small” losses can add up to significant unpaid wages. Time clock rounding – the practice of adjusting clock-in and clock-out times to a set interval – is common in many workplaces. But when applied improperly or in a way that systematically underpays employees, time rounding can cross the line into unlawful wage practices. In this article, we’ll break down how time clock rounding practices work, when they’re legal or illegal, and what to do if you suspect your employer is shorting your hours.

If you’re feeling overwhelmed by time clock rounding issues, it’s time to take action. The Lore Law Firm can work to ensure you get what you deserve. Contact us for guidance on your case or call us at (866) 559-0400 to discuss your situation today. Let’s work together to secure your financial future.

Understanding Time Clock Rounding Practices

Time clock rounding occurs when an employer rounds your clock-in and clock-out times to the nearest specified increment – often 5 minutes, 6 minutes (one-tenth of an hour), or 15 minutes. For example, if you clock in at 7:53 a.m., a 15-minute rounding policy might round your start time to 8:00 a.m. (losing 7 minutes), but if you clock in at 8:07 a.m., it might round back to 8:00 a.m. (gaining you 7 minutes). Many companies use rounding to simplify payroll calculations. Ideally, a rounding policy is meant to “average out” so that over time you’re paid for all the time you actually work.

A neutral rounding policy is the key legal concept here. Under federal law, specifically the Fair Labor Standards Act (FLSA), time rounding is permitted under federal law only if it is applied neutrally and does not, over time, result in employees being undercompensated for hours worked. The U.S. Department of Labor allows rounding to the nearest 5, 6, or 15 minutes “provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate employees properly for all the time they have actually worked.” In practice, this means an employer’s rounding must sometimes round time up as well as down.

However, problems arise when an employer’s time clock rounding practices are not truly neutral. If you notice that every time rounding occurs it benefits the company (e.g. your time is always rounded down, never up), that’s a red flag.

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When Is Time Clock Rounding Legal vs. Illegal?

Rounding can be legal – but only under strict conditions. The FLSA and Department of Labor tolerate rounding to simplify recordkeeping, if and only if the practice doesn’t result in workers being shorted pay over time. Rounding to increments of up to 15 minutes is generally accepted under federal guidance; larger increments increase the risk of violating wage-and-hour laws. Many employers follow the commonly used ‘7-minute rule’ for 15-minute rounding intervals, which is based on Department of Labor guidance rather than an explicit statutory requirement. The idea is that over many shifts, the rounding averages out and you are fully paid for all hours worked.

Rounding becomes unlawful when it results, over time, in employees being underpaid for hours actually worked. For example, if your employer’s policy always rounds in their favor, you might never see extra minutes on your paycheck. This is not neutral – it’s effectively a scheme to shave off small amounts of time each day. If rounding “consistently reduces recorded hours” or always benefits the employer, it violates the FLSA. The law requires paying for all time actually worked, and an employer cannot use a rounding policy to dodge that obligation.

The U.S. Department of Labor has stated that rounding practices must not result in a failure to compensate employees for all hours worked. If an investigation finds a rounding policy is systematically cheating workers (even by a few minutes each day), the company can be held liable for back wages and damages.

Modern technology and exact time: It’s worth noting that in the past, rounding was allowed partly because keeping exact time was hard. But today, digital time-clock systems can capture work time down to the minute (or second) with ease. California has recently cast doubt on even neutral rounding policies. In a 2023 decision applying California wage law, a California Court of Appeal questioned the continued validity of rounding policies where employers can accurately capture every minute worked. The rationale was that with precise digital records, there’s no excuse to short an employee even a few minutes.

For now, under federal law and in most states, rounded time is legal only if it’s neutral on its face and in practice. Any time rounding violations – where the method skews against workers – can lead to legal trouble for employers and potential back pay for employees.

Time Rounding Violations = Wage Theft: How Small Minutes Cost Big Money

When done improperly, rounding is essentially wage theft by the time clock. By shaving a few minutes here and there, an employer can save on labor costs – at the direct expense of the employee. These small losses might seem trivial daily, but they add up significantly over time. For example, losing just 5 minutes of paid time each workday translates to about 21.7 hours per year of unpaid work (assuming 260 workdays). Multiply that by your hourly rate – that’s money taken out of your pocket through stealthy time-clock tweaks.

Consider a concrete example: A non-exempt employee often ends up working until 5:12 p.m. (12 minutes past her shift) to finish tasks. If the company’s rounding policy always rounds her 5:12 p.m. punch back to 5:00 p.m., she’s losing 12 minutes of paid time every day. Over a 5-day workweek, that’s 60 minutes – an entire hour – of work she did that she’s not paid for. In overtime terms, that could mean she worked 41 hours but was only paid for 40, dodging the requirement to pay time-and-a-half for that extra hour. The result: the employee is owed overtime pay for that hour each week.

The Department of Labor has investigated and penalized companies for improper rounding. Federal investigations have found employers liable where rounding practices consistently reduced recorded work time and resulted in unpaid overtime. The employer had to pay $594,313 in back wages and damages as a result.

Courts have imposed substantial damages on employers where rounding policies caused widespread, cumulative wage losses across large workforces. Over several years, each employee lost on average only about $262 due to the rounding – but across 33,000+ employees, those minutes turned into tens of millions in unpaid wages. Because the court found employees “lost time more often due to the policy than they gained”, the employer was liable for all that stolen time.

The bottom line: If time rounding is used to deny you wages you rightfully earned, it’s illegal. These time rounding violations are wage theft, plain and simple.

Punch Clock Manipulation and Other Wage Theft Tactics

Time clock rounding is just one way employers might short your hours. Some employers engage in more overt punch clock manipulation or timesheet alterations to save on payroll. Be on the lookout for:

Always rounding down: If your employer’s system always rounds your clock times in one direction (down) and never up, that’s a manipulation of the rules.
Adjusted time punches: Your manager or HR may manually change your recorded clock-in/clock-out times to reduce hours without the employee’s approval.
Automatic break deductions: Automatically deducting breaks that were not actually taken cheats you out of wages.
Off-the-clock work: Your boss might ask you to come in early or stay late but insist you not record that time. Any work performed off the clock is supposed to be paid.
Inflating break times: Break time rounding or inflating break durations to cut paid time is similarly illegal if it results in unpaid work time.

All these tactics have the same effect: you end up working more than you’re paid for. The FLSA requires that all hours worked be compensated, and that overtime (hours over 40 in a week for most employees) be paid at time-and-a-half.

What To Do if You Suspect Time Rounding Violations

If you think your employer’s time clock rounding practices are shorting you, here are steps to take:

Track your own time – Start keeping a personal log of the exact times you start and stop work each day. Compare these to your pay stubs or the hours your employer recorded.
Save evidence – Keep copies of anything relevant: schedules, time cards, punch records, emails or texts from your boss about hours, etc.
Calculate the potential loss – Do the math on how much time you might be losing. Even 15 minutes per day could equal ~65 hours per year of unpaid time.
Don’t sign away your rights – Be cautious if your employer asks you to verify time sheets that you know are inaccurate. It’s illegal for an employer to retaliate against you for raising concerns about wages.
Contact the Department of Labor or state labor agency – You can file a complaint with the Wage and Hour Division or your state’s labor department.
Consult an employment law attorney – An experienced wage and hour lawyer can evaluate your situation quickly. Many lawyers take these cases on a contingency fee, meaning you pay nothing upfront.
Act promptly – Wage claims are subject to statutes of limitation. Under federal law, you can typically recover up to 2 years of back wages (3 years if the violation was “willful”).

Document, document, document – that’s your mantra when dealing with suspected time shaving.

Frequently Asked Questions

Q: Is time clock rounding legal or is it considered wage theft?
A: Time clock rounding can be legal under the FLSA, but only if it’s done fairly. A truly neutral rounding policy that sometimes rounds up and sometimes down is legal. However, if the rounding policy always seems to short your time, then it’s essentially wage theft.

Q: How can I tell if my employer’s rounding policy is unfair?
A: Look for patterns. If you always seem to be missing a few minutes each day, you notice extra minutes never make it into your paid time, or you never see an instance where you got paid more time than you worked, these are red flags.

Q: My boss changes my time punches. Is that legal?
A: No, that’s generally illegal. Managers who alter timesheets to remove work hours or instruct employees to work off the clock generally violate the FLSA, which requires payment for all hours worked.

Q: It’s only a few minutes each shift that I’m missing – is it worth pursuing?
A: Yes. Those minutes add up, and legally, you are entitled to 100% of your earned wages. You may be able to recover unpaid wages going back up to two years (or three years for willful violations), and in many cases an additional equal amount as liquidated damages.

In summary, time clock rounding practices should never result in you working unpaid time. Time rounding violations happen when employers manipulate or misapply rounding to shave off wages, and that is illegal wage theft. Remember, the law is on your side to ensure every minute you work is a minute you’re paid for.

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