Many employers do not pay employees according to the exact number of hours and minutes they work, but rather utilize some sort of "rounding" or "roundoff" system whereby a certain interval is set that serves as the minimum block of time that will be recognized as a unit of time worked or not worked. Time missed or worked within that interval will not be deducted from or added to the time worked, whereas time missed or worked outside that interval will result in that interval being deducted from or added to the time worked. The regulations on this are found in subpart D of part 785 of the wage and hour regulations. 29 C.F.R. 785.47 explains the so-called de minimis rule, stating that "insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be disregarded." It notes, however, that the de minimis rule applies only in case of intervals of "a few seconds' or minutes' duration", and the employer would need to be able to explain how disregarding such intervals is "justified by industrial realities." In addition, any fixed or regularly-occurring work time may not be disregarded, no matter how small, as long as it can be readily ascertained. 29 C.F.R. 785.48(a) notes that if employees voluntarily clock in early prior to their scheduled starting time, or clock out after their scheduled ending time, they do not have to be paid for any time they are not actually working (i.e., getting a cup of coffee, reading a newspaper, eating doughnuts, etc.). However, employers should avoid letting employees do that, since major discrepancies between the time clock records and the hours for which pay is given may "raise a doubt as to the accuracy of the records of the hours actually worked.", in turn possibly tempting DOL to pay more attention to whatever personal records the employees may have maintained.
Strategic tip: do not allow employees to clock in or out more than a minute or two early or late. If they want to come early or stay late to relax, they can do that if the company approves, but make it clear that no work will be allowed outside of the normal schedule, and they should not clock in until they are ready to work.
As to "rounding" practices, 29 C.F.R. 785.48(b) explains that rounding off work times to the nearest 5 minutes, one-tenth of an hour, or even quarter of an hour is permissible, as long as it works both ways, i.e., both to the advantage and disadvantage of the employee. That way, the system can be said to achieve a balance over time, and the employee is not suffering a detriment by virtue of a system that always rounds off in favor of the company.
DOL's Field Operations Handbook covers this subject in Chapter 30, "Records, Minimum Wage, and Payment of Wages", pertinent excerpts from which appear below:
§ 30a02 Recording working time.
In recording working time, insubstantial or insignificant periods of time outside the scheduled working hours may be disregarded. The courts have held that such trifles are de minimis. This rule applies only where a few seconds or minutes of work are involved and where the failure to count such time is due to considerations justified by industrial realities. An employer may not arbitrarily fail to pay for any part, however small, of the employee's fixed or regular working time.
It has been found that in some industries, particularly where time clocks are used, there has been the practice of recording the employee's starting and stopping time to the nearest five minutes, or to the nearest one-tenth or quarter of an hour. For enforcement purposes, this practice of computing working time will be accepted, provided that it is used in such a manner that it will not result, over a period of time, in the failure to compensate the employees properly for all hours they have actually worked.
If a record is kept with respect to each employee employed on a weekly or monthly basis in an establishment or department thereof operating on a fixed schedule, indicating the exact schedule of hours per day and hours per week which that employee is normally expected to work, and if the payroll (or other) records maintained by the employer indicate for each worker or for each group of workers that such scheduled hours were, in fact, adhered to, this will be considered compliance with Reg. 516 (Part 516, the recordkeeping regulations). When fewer or more hours than those fixed by the schedule are worked, the employer must supplement this record by showing the exact number of hours worked on the day and week involved.
The records must also contain a statement made each pay period that, except where otherwise recorded, the employees worked neither more nor less than the scheduled hours. This policy is applicable only where hours of work are actually fixed and it is unusual for the employee(s) to work either more or less than the scheduled hours.
§ 30a03 "Long punching" of hours.
Where time records show elapsed time greater than the hours actually worked because of reasons such as employees choosing to enter their work places before actual starting time or to remain after their actual quitting time, the CO [Compliance Officer] shall determine whether any time is actually worked in these intervals. If an employee came in early for personal convenience and did not work prior to the scheduled beginning time, a recording of the fact that the employee worked, for example, 8 hours that day is all that is required.
The CO may suggest to the employer, but not require, that the punch-time be kept as close to the work-time as possible to avoid any question that work was performed during such intervals.
Note: FOH 30a02(a) and (b) basically correspond to 29 C.F.R. 785.47 and 785.48(b), respectively, while FOH 30a03(a) corresponds to 29 C.F.R. 785.48(a).
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