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In 2024, a $9.3 million verdict was issued against Providence Health & Services in Washington for improper time rounding practices. This case serves as a critical reminder that employee time rounding must be neutral—it cannot unfairly favor the employer. An example of rounding that is not neutral occurs when, an employer determines on a case by case basis whether an employee's time should be rounded up or down depending on whether it benefits the employer.
Acceptable "Rounding" Practices:
In some industries, particularly where time clocks are used to record employee work time, a practice is used of recording the employees' starting time and stopping time rounded to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for the time they actually work. For enforcement purposes, this practice of computing working time will be accepted, provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked. (29 CFR 785.48) and (N.J.A.C. 12:56-5.8).
Employers must maintain a consistent and even-handed rounding policy and continue to comply with minimum wage and overtime requirements.
Therefore, an employer should:
- Document Your Policy: Clearly outline your rules and policies in your employee handbook.
- Train Supervisors and Payroll Staff: Ensure your team understands and correctly applies the rounding policy.
- Use Reliable Time Tracking Systems: Invest in systems that accurately record time and apply rounding rules automatically.
- Regularly Review and Audit Practices: Conduct periodic reviews to ensure your policies remain neutral and compliant with federal and state laws.
If an employer rounds incorrectly, it could lead to a wage theft claim. Wage theft claims are particularly costly because they may result in 200% of the wage loss awarded against the employer as a penalty, as well as the employer having to pay the employee's attorneys' fees.
To ensure that your rounding practices comply with state and federal law, reach out to our Employment Law Team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
