Employers generally request that their hourly employees complete a timesheet to record hours worked for the week. The employee usually records his exact hours worked on the timesheet, not considering the issue of rounding. Further, if the employee punches a time clock, the time clock records the hours precisely as punched. The payroll person must round the hours worked before paying them.
Understand how rounding operates. According to the U.S. Department of Labor, the Fair Labor Standards Act (FSLA) permits the employer to round to the nearest quarter hour. The employer may be in violation of the minimum wage and overtime compensation requirement if he constantly rounds down.
Round down time from one to seven minutes and round up eight to 14 minutes. For instance, say the employee’s timecard says in–8:13 a.m. and out–4:59 p.m. Round up 8:13 to 8:15 (since it is closer to 8:15 a.m. than it is to 8 a.m.) and round up 4:59 p.m. to 5:00 p.m. since it is closer to 5 p.m. than it is to 4:45 p.m. Say the employee’s time says in–8:05 a.m., round down to 8 a.m. Note that the employee would not be paid for the extra five minutes.
Know that the employee should receive overtime compensation if he has a 40-hour schedule for each week, but because of clocking in slightly early or slightly late each day, he may be eligible for overtime hours. For example, say the employee’s normal schedule is 8 a.m. to 4 p.m., but he clocks in at 7:50 a.m. every morning (Monday to Friday) and clocks out at 4 p.m. His total hours for the week will be 41.25 (1.25 hours to be paid at his overtime rate) because of the extra 15 minutes he gains everyday from clocking in at 7:50 a.m.
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.