Round and round it goes, where it stops you should know: Why time clock rounding matters

July 8, 2015|Thomas Schultz

Your employee rushes in, almost taking out the HR director as he rounds the corner. He’s running late and trying his best to punch in before his 7 a.m. start time. Aside from the potential HR issue at hand, how does being late affect his pay? Does your company set the time clocks to round? Does it matter?

The short answer is yes. If your time clock is set to “round” – or track data to the nearest time increment – you could face regulatory consequences if it’s not done correctly. Any rounding that the time clocks are set to make for a business must be done in a way that doesn’t solely benefit the employer.

For instance, if the time clock is always rounding up to the next quarter hour, the result is that it is consistently rounding in favor of the business. When this happens, the employee could end up losing more than an hour of pay every week.

As a matter of practice, some companies choose to round to the nearest five-minute increment. Others prefer rounding to the quarter-hour, or in 15-minute increments, which is also permitted. An example of balanced rounding in 15-minute increments would look something like this:

  • Employees punching in at 7:07 a.m. or earlier would be paid starting at 7 a.m.
  • Employees punching in at 7:08 a.m. or after would be paid starting at 7:15 a.m.

In this way, there are times that the clock rounds down in the employee’s favor, and other times it rounds up in your favor. On the whole, the rounding is balanced over time.

Communication is essential

Time clock rounding is more than just the technical process of time clock functioning – it is a people issue. As a leader you are responsible for time clock management, including the supervision of your employees and their hours worked. From a legal standpoint, leaders are responsible for controlling when an employee clocks in and clocks out. Further, it is the employer who must make sure that the time is tracked properly and any rounding that is used does not exclusively favor the employer.

Communication related to this process is essential. Share your timekeeping rules early, such as during onboarding. As part of this process, do a formal check for learning. The onboarding leader should ask one or two questions to assess understanding, such as “True or false: If you clock in 10 minutes after the hour, you will begin being paid for all work performed starting at 15 minutes after the hour.”

Place signs near the time clock to support your communication efforts, but be aware that signs can be missed. You’re relying on employees to notice (and read!) the sign. If it has been there more than 20 days, take the sign down, change the color and put it up again.

Time card audits

In the event that you find yourself the object of an employer wage and hour audit, the auditor will certainly ask the business about its policies. Keep in mind that it may choose to talk with employees about practices where there is conflict between the complaint and your policies.

Consider these practices:

  • Redline audits to correct time cards. Are you having team member initial time card corrections? It’s a good idea, because you’re making a change to a document related to pay.
  • Numerous time card changes. If you have so many time card changes that it’s not practical to do redline audits, look at your process. Find ways to tighten up your timekeeping practices to reduce the number of mistakes.
  • Time card correction documentation. When a time card error is discovered, send a letter to the employee and place a copy in their file. The letter should outline what you found, what’s being done to correct it and cover all related details. This documents what you’re doing to resolve the issue.

For additional ideas and assistance with your timekeeping and other human resources needs, contact Thomas Schultz, PHR or any member of Schenck’s Human Resources Consulting team at 800-236-2246.

Thomas Schultz, PHR, is a Senior Human Resources Consultant with Schenck. He has more than 20 years of human resources experience, including building human resource systems and structures that match the changing needs of businesses. He brings a broad blend of skills in areas such as leadership coaching, employee relations, benefits, training and development, change leadership and employment law.