Best practices for time clock rounding
1. Determine if you’re eligible
Start by making sure that you really must use rounding for payroll and invoicing needs.
It might have been necessary back in the day, especially when employees had to wait at the entrance and use a machine to punch in their time cards. For most modern businesses, the system is different today. That’s why it’s good to keep checking how applicable rounding is for you.
2. Consider the pros and cons
In some situations, instead of being a benefit for your company, it can actually lead to losses.
For example, after rounding, an employee’s logged hours may cross into overtime
, which means additional costs for your business.
Take the time to do internal research to figure out what purpose the rounding practice serves for your business, so that you can weigh it against the risks.
While some companies use it in order to cut down their payroll costs, this often entails illegal rounding that harms employees’ lawfully-earned payments.
The best piece of advice in this respect is to avoid using rounding for budget-cutting purposes, as it can easily end in:
- Administrative penalties
- Costly labor lawsuits
- Class action suits
3. Create a time rounding policy for your business
If you establish that rounding is truly necessary, it’s a wise idea to make an assessment of your rounding practices every year. By conducting an annual audit, you can examine how practical your system is, and if it needs adjustments.
Make sure that you analyze its impact on employees’ timesheets regularly. It’s also essential to stay up-to-date with the changes in the legal framework and to apply them in your business immediately in order to ensure your compliance.
While rounding is legal in the U.S., it poses many risks if not done correctly, as it may go against the established working hours laws. You should carefully determine your time clock rounding rules, making sure that they do not violate the FLSA.
4. Be transparent and fair
The most important principle that you should keep in mind is that the rounding should not result in paying less to your employees than they legally have earned with the hours worked. Even if this occurs by mistake, it can still result in a lawsuit against your company.
It is also important to not round up unpaid meal breaks, as such cases have also led to legal grievances.
If the rules are transparent and fair, your staff will be less likely to go down the lawsuit path in disputable cases. However, if your rounding practices are unclear or haven’t been communicated well, people will have more reasons to doubt them and, possibly, seek further legal action in problematic cases.
5. Communicate, communicate, communicate
While it’s a tricky subject, getting your employees on board with your timesheet rounding practices can be a great opportunity to foster a better atmosphere and build trust with your team. This means proactively communicating
with them and providing a simple, transparent explanation of how you round up their hours.
Make it clear that it doesn’t take paid time away from them (a common misconception) and show how you’ve got their best interests at heart and work to make sure they get fairly, accurately paid for every minute they spend at work.