Every company has its own unique approach to record-keeping and payroll processing. Each decides how much to pay its workers, how to schedule them and also how is maintains necessary employment records in order to comply with federal law.
Many businesses now use digital timekeeping software that allows workers to clock in at a specific computer or register and maintain records that are accurate down to fraction of a second. Other businesses may have workers manually note the time they begin and end a shift. Particularly when companies do not have digital timekeeping software, they may pay workers in specific increments of time. Five, 10 and even 15-minute intervals are common for payroll accounting.
Businesses may slightly alter payroll records by rounding them up or down into a full interval. Some workers may believe that payroll rounding grants them the right to pursue a wage claim against a company for the time that they worked but did not receive pay. Is timeclock rounding a form of wage theft?
Yes, rounding can be a wage violation
Although businesses do have the right to choose how they pay their workers, including the increments of time that they allow for payroll purposes, they must be fair in how they apply those rules. In other words, for timeclock rounding to be legal, the company needs to apply the rule neutrally depending on the time a worker started and ended their shift.
If a worker puts in three minutes of a five-minute increment, the business should round up and pay them for five minutes. If the company only ever applies rounding rules to reduce a worker’s billable time, then the practice of adjusting their time clock records is likely a form of wage theft. However, if the company both rounds up and rounds down depending on the circumstances and does so neutrally and consistently, the practice of time clock rounding is not on its own, a fair wage violation.
Keeping close records of when someone actually works and then comparing them with the pay that they receive could help someone establish whether or not their company engages in inappropriate or abusive timeclock rounding practices.