Adventures in Rounding: What if the "Rounding" Doesn't Happen at the Time Clock?
December 22, 2014
This past spring (here and here), I discussed rounding time clock punches (usually automatically with a time clock system) at the beginning and end of a shift. To recap briefly, rounding is the practice of adjusting time clock punch times within specific bounds. For example, if your employees punch in for work at 7:57, 8:01, and 8:02, your rounding rules may treat all of those punches as occurring at 8:00 a.m. for payroll purposes.
Even if it isn’t something that we recommend employers do (absent special circumstances), this practice of rounding employees’ time up or down in increments is permissible under the Fair Labor Standards Act’s (FLSA) regulations under specific circumstances. Paying for actual time worked is always the best practice, but for those of you that can’t easily track time down to the exact minute, Section 785.48 of the FLSA’s regulations provides that employers may utilize time clocks that round up or down in increments of up to a quarter hour so long as the clock rounds both ways, occasionally in the company’s favor and occasionally benefitting employees. 29 C.F.R. §785.48(b). But what if the “rounding” effect isn’t due to the time clock, but access to the time clock? That’s essentially the question one reader sent me recently:
Q. We do not use a time clock for some of our field employees. Instead, we have them log on to a remote system and send an e-mail when they arrive. Before they leave, they log on to the remote system again and send another e-mail. The e-mail timestamps serve as the punch-in and punch-out times. The problem is that logging onto our server to send this e-mail can take anywhere from 3 or 4 minutes to as long as 10 minutes, start to finish, for these employees. We then round to the nearest tenth of an hour, just for ease of payroll computations. This does not seem like a very accurate way to track time, I know, but is it legal?
While this method might be inefficient, it is nonetheless one practical way to track time for this group of employees that does not have access to a time clock. Ultimately, what our reader describes above is just “rounding” with a twist. Let’s take the easy part first. Rounding entries to the nearest tenth of an hour is one of the enumerated intervals specified in the regulations. 29 CFR § 785.48(b) actually gives you three standard increments you can use: five minutes, six minutes (1/10th of an hour), or 15 minutes (1/4 of an hour). By rounding to the nearest tenth of an hour, this calculation is likely to cut both ways: sometimes in the company’s favor and sometimes in the employees’ favor. Of course, remember to check your state laws and regulations, too, as they may impose additional limitations, or even provide additional incremental rounding options.
But what about the twist of employees needing to spend up to 10 minutes to log on and clock in and out? This part could present some problems under the FLSA. One area of emphasis for the Department of Labor in recent years has been time spent by employees turning on computers and loading computer applications, particularly in call centers or other environments where computers are integral and indispensable to the job. Employees who turn computers on and then spend time getting coffee, visiting with co-workers, or simply waiting for the computer to boot and the applications to open are working, according to the DOL. The DOL has taken the position that such time is compensable under the continuous workday rule. If employees punch an electronic time clock application or send an e-mail to start their day after these initial activities, an employer would consistently miss the first few minutes of its employees’ work days, every day. Similarly, at the end of the day, are employees required to shut down the computer or perform other activities after sending the e-mail? If so, then the employer could be missing the last few minutes of the workday, too. That time may no longer be considered de minimus and will get expensive quickly.
Even if we can demonstrate that the workers have no need to use the computer during the day other than to send the two e-mails—essentially making the e-mail a very complicated time clock—we still may have FLSA issues. On the surface, it might seem as if employees would regain whatever time they lose waiting on the server in the morning when they have to wait on the server in the afternoon. But, that’s just an assumption (and it is not the one the attorney representing the employees is going to use in wage and hour litigation). What if logging in at the beginning of the shift takes 10 minutes in the morning, but only 3-4 minutes to log off in the afternoon? If that’s the case, employees would arguably lose 1/10th of an hour every day. Think about your own networks: could you prove in litigation what network conditions and client/server loads were every day at the start and end of each shift for each device for each employee? Highly unlikely.
Changing up the facts a bit, if the employees only have to log on in the morning and then can stay logged in the rest of the day, the wage and hour problem in the question above gets even clearer. This calculation would almost assuredly work against employees every time, and arguably present the same kind of violation as an employer always rounding time entries in its favor.
Insights for Employers
Three points to remember:
- Rounding should never obscure your duties under the FLSA to accurately record the hours your employees work. The FLSA regulations specifically allow rounding, but ask yourself if rounding is really your best option. In the question above, the second payroll step might be convenient, but spreadsheets and accounting systems are more than capable of doing these calculations for you. Don’t introduce uncertainty.
- Employers must take note of and account for all work activities, remembering that these might include putting away, shutting down, or turning off computers, equipment, or tools. If your employees depend on any of that equipment to clock in or out, you might be missing time. Whatever time recording system you elect to use must be capable of capturing all time that employees work, including any initial start-up and shut-down activities.
- Periodically audit how rounding works in practice. Just because something appears neutral on paper does not mean that it is neutral in practice. Make sure that your rounding practice really does work in your employees’ favor some of the time.
Finally, some parting advice for all employers out there: if you find yourself thinking that your time tracking system is weird and inaccurate, it’s definitely time to ask for some help from legal counsel!