Fair Labor Standards Act: Rounding Hours Worked
The federal Fair Labor Standards Act (FLSA) requires covered employers to pay non-exempt employees overtime pay for all hours worked over forty (40) hours in a given workweek. The failure to count all hours, or portions thereof, can result in an overtime pay violation because employers have not fully accounted for hours worked in excess of forty (40) during the workweek.
Many employers track employee hours worked in fifteen (15) minute increments, and the FLSA allows an employer to round employee time to the nearest quarter hour. However, an employer may violate the FLSA’s overtime pay requirement if the employer always rounds down when the employee works less than a full fifteen-minute increment. Employee time for one to seven minutes may be rounded down and not counted towards the employee’s hours worked, but employee time for eight to fourteen minutes must be rounded up and counted as a quarter hour of worked time. See 29 CFR § 785.48(b).
In a fact sheet explaining common FLSA violations that were discovered by the United States Department of Labor’s Wage and Hour Division (WHD) during investigations that it conducted in the health care industry, the WHD provided the following examples of how an employer can round an employee’s hours worked:
An intermediate care facility docks employees by a full quarter hour (15 minutes) when they start work more than seven minutes after the start of their scheduled shift. Does this practice comply with the FLSA requirements? Yes, as long as the employees’ time is rounded up a full quarter hour when the employee starts working from 8 to 14 minutes before their shift or if the employee works from 8 to 14 minutes beyond the scheduled end of their shift.
An employee’s schedule is 7:00 a.m. to 3:30 p.m., with a thirty minute unpaid lunch break. The employee receives overtime compensation after working more than forty (40) hours in a workweek. The employee clocks in 10 minutes early every day and clocks out 7 minutes late each day. The employer follows the standard rounding rules. Is the employee entitled to overtime compensation? Yes. If the employer rounds back a quarter hour each morning to 6:45 a.m. and rounds back each evening to 3:30 p.m., the employee will show a total of 41.25 hours worked during that workweek. The employee will be entitled to additional overtime compensation for 1.25 hours.
An employer only records and pays for time if its employees work in full 15 minute increments. An employee paid $10 per hour is scheduled to work 8 hours a day Monday through Friday, for a total of 40 hours a week. The employee always clocks out 12 minutes after the end of her shift. The employee is paid $400 per week. Does this comply with the FLSA? No, the employer has violated the overtime requirements. The employee worked an hour each week (12 minutes times 5) that was not compensated. The employer owes the employee for one hour of overtime each week.