Atlanta Employment Attorneys Blog
Hourly employers (and employers who use hourly employees) are well acquainted with the “time clock.” Employers have an obligation to accurately record hours worked and pay workers for all time worked; otherwise, they risk violating the Fair Labor Standards Act. Employers, however, need not pay workers down to the minute. The law allows them to engage in rounding of hours so long as the rounding method is equally likely to round up as to round down. Systems that always round down deprive workers of compensation they had earned and violate the law. For questions about rounding of hours and what methods are (or are not) compliant with the FLSA, talk to an experienced Atlanta wage and hour lawyer to get the answers you need.
An example of an improper method — and the costs it can trigger — was on display earlier this year.
The Labor Department’s Wage and Hour Division announced in May that it had recovered nearly $600,000 in “back wages and damages” for more than 400 workers employed by a construction contractor in Florida.
One of the employer’s major problems was its rounding method for hours. Specifically, according to the WHD, the employer’s “rounding methods improperly reduced hours that resulted in unpaid overtime for hours worked over 40 per workweek.”
Rounding is a helpful tool for many employers, allowing them to take precise clock-in and clock-out times and convert them into more manageable fractions. Properly implemented, this protocol simplifies tracking hours, eases payroll processing, and reduces the risk of improperly over- or underpaying workers.
Many employers record employees’ times in and out in a standard hour and minute (HH: MM) format. Paying workers based on the exact number of minutes worked, then, would require multiplying the workers’ hourly rate by a complicated fraction. For example, say John Doe clocks in at 12:02 and clocks out at 6:01. Without rounding, John Doe’s pay would be 5 and 59/60 times his hourly rate.
With rounding, the calculation becomes less complex. Say, for example, John Doe’s employer rounds all clocked times to the nearest 15 minutes (which, along with rounding to the nearest 5 or 10 minutes, are commonly used methods). Under that system, John Doe’s clock times would round to 12:00 and 6:00, meaning he would be compensated for 6 hours of work.
Cannot ‘Always Round in the Employer’s Favor’
As the WHD’s division director pointed out, while the law permits employers to engage in rounding in their pay practices, “it is the responsibility of all employers to ensure the use of rounding in their time systems is balanced and does not always round in the employer’s favor.” For example, say that an employer used a rounding system that rounded all fractions to the nearest completed 15-minute increment. (As examples, working 7 hours and 30 minutes would yield pay for 7.5 hours, but so would working 7 hours and 35 minutes, 7 hours and 40 minutes, or even 7 hours and 44 minutes.) That method would violate the FLSA because it would result in pay that always rounds down.
That was the problem in the construction contractor’s case: the employer’s rounding policy unfairly rounded down and, in the process, shortchanged workers for their hours worked.
If you have questions about rounding methods in pay practices, it is wise to get knowledgeable answers before you implement a process and begin using it. The experienced Atlanta wage and hour attorneys at Parks, Chesin & Walbert can provide you with thorough, manageable, and fully compliant advice and solutions. Contact us through this website or at 404-873-8048 to schedule a consultation today.