On July 1, 2019 the Department of Labor (DOL) issued an opinion letter addressing permissible rounding practices for calculating hours worked. The opinion letter confirms that the long-held standards of rounding under the Fair Labor Standards Act (FLSA) are compliant under the Service Contract Act (SCA). SCA regulations provide that contractors should calculate hours worked by using FLSA principles.
Best practice is to limit rounding to the nearest quarter-hour or less
The FLSA allows employers to round time in order to determine an employee’s hours worked, as long as the practice “will not result, over a period of time, in failure to compensate the employee properly for all the time they have actually worked.” The rounding practice must be “neutral on its face and as applied” when reviewed over several pay periods. The DOL has accepted employer rounding to the nearest 5, 6, 15, or 30 minutes — as long as the rounding averages out neutrally to both the employer and employee.
You can read the DOL opinion letter here.
eBacon’s time and attendance system automatically allows employers to round time per the DOL’s guidelines and clients can review a report to self-audit the neutrality of its rounding pay practices.
See eBacon’s SCA compliance capabilities to learn more about how it can simplify your payroll and keep you compliant.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.