Federal Court of Appeals Affirms Use of Time Card Rounding

May 09, 2016

The U.S. Ninth Circuit Court of Appeals held that, despite the technology available in today's workplace, employers are permitted to round employees' time to the nearest quarter-hour.

Over 50 years ago, federal regulations endorsed the use of time card rounding practices, acknowledging accuracy and calculation problems created by the largely handwritten ledgers in use at that time. The employer at issue, however, did not use old-fashioned, handwritten ledgers. To the contrary, it used state-of-the art computer systems that were designed to help prevent off-the-clock work.

Although the system utilized technology allowing precise, to-the-minute time logging, the employer rounded the time to the nearest quarter-hour when calculating payroll. If an employer is going to use a rounding system it must be very careful to apply the system in a consistent manner that favors neither overpayment nor underpayment. For example, if an employee clocks in at 8:08, the system would round the time to the nearest quarter-hour, which would be 8:15, and the employee would effectively lose 7 minutes of paid time. However, if the same employee clocks in on a different day at 8:07, the system would round the time to 8:00, thus effectively paying the employee for 7 minutes he did not work. The rationale is that – over the long run – the overpayments and the underpayments will even out.

SESCO recommends that clients review all applicable policy and practices to ensure compliance. For assistance, contact us at 423-764-4127 or by email at sesco@sescomgt.com.