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Rounding Practices on Time Clocks Lead to Regular Pay and Overtime Lawsuits

Rounding Practices on Time Clocks Lead to Regular Pay and Overtime Lawsuits

August 28, 2018
Updated On:
August 28, 2018

Although time clocks are supposed to accurately record hours worked so that employees will be paid for all hours worked, there has been an increase in the number of lawsuits alleging that employers failed to pay employees properly, despite the use of timeclocks. The Department of Labor permits the rounding of employees’ working periods, unless such policies deprive workers of compensation. Many cases addressing this issue have made their way to state and federal courts in recent months.

In one New Jersey class action suit, 200 employees of American Airlines claimed that the airline rounded down the hours they worked on time clocks. In another class action suit in California, more than 700 Dollar Tree employees alleged that the discount retailer implemented time clock policies that rounded down hours worked to the nearest 15 minutes. These rounding practices reportedly deprived the employees of regular and overtime wages.

A federal regulation acknowledges that the purpose of using time clocks is to avoid employers’ “failure to compensate the employees properly for all the time they have actually worked” and allows rounding times to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. In New York, rounding policies are generally allowed, but policies that “systematically undercompensate employees” are illegal.

According to the Department of Labor, employers using time clocks are not required to pay employees who voluntarily start before or stay after their scheduled shifts, as long as the employees are not required to work during that time. However, most employees who begin their shifts early or end their shifts late usually conduct actual assigned work during such hours.

Employers who have been sued by employees for wage and overtime violations as a result of rounding down hours on time clocks include Kroger Co., Walt Disney Parks & Resorts US Inc., and Morango Casino Resort & Spa.

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