Timesheet rounding is more common than you think. According to a 2018 survey by TSheets by QuickBooks, 55 percent of business owners say they always round employee timesheets up or down.*
In most cases, these business owners are rounding to make running payroll and invoicing clients a little easier. But 34 percent admit to rounding employee hours down deliberately, to reduce payroll costs or prevent employees from clocking in before their shift has started.
Knowing this, you might be wondering: Is timesheet rounding legal? And how does it work? Read on to find out.
What is timesheet rounding?
Timesheet rounding occurs when an employee’s timesheet is rounded either up or down to the nearest minute or the nearest five, 10, or 15 minutes upon clock in and clock out. Some employers may choose to round even higher (e.g., 30 to 60 minutes), but this is considered unlawful in the eyes of the federal government.
Timesheet rounding exists to account for uncertain or indefinite periods of time in the workday, ranging from a few seconds to a few minutes (e.g., the time it takes to walk to the break room and punch in or the time it takes an employee to boot up their computer). And because 55 percent of business owners say they aren’t using an electronic system like a computer, phone, or tablet to track employee time, timesheet rounding can be a necessary practice.
Is timesheet rounding legal?
According to the Department of Labor (DOL), timesheet rounding is legal, as long as it’s done correctly. When it comes to rounding, there are three rules employers must follow to ensure compliance.
- Timesheet rounding can’t favor employers. The policy must either be completely neutral or favor employees. In other words, employers can’t always round employee time down.
- Fifteen minutes is the maximum rounding increment.
- Employers must obey the seven-minute rule. If an employee clocks in at or before the seven-minute mark within a 15-minute window (e.g., 8:07), their time rounds down (to 8:00, in this case). If the employee clocks in after the seven-minute mark, their time rounds up (to 8:15, in this case).
With these rules in mind, there are three ways to round employee timesheets legally.
- Round up or down indiscriminately, to the nearest increment. If an employee clocks in at 8:58 and out at 4:56, their timesheet should read 9:00 in and 5:00 out.
- Round all clock-in times to favor the employee and all clock-out times to favor the employer. In the above example, the employee’s timesheet would have an 8:55 clock-in time and a 4:55 clock-out time.
- Round all clock-in and clock-out times to favor the employee. In this case, the employee’s time card would show an 8:55 clock-in and a 5:00 clock-out.