By Andie Burjek
Oct. 16, 2020
Timesheet rounding allows organizations to round an employee’s clock in or out time by up to 15 minutes, often giving them cleaner numbers to work with. Still, the practice of timesheet rounding has its limitations.
Michael Cardman, a legal editor at XpertHR, cited a survey that found 55 percent of employers use this practice. Meanwhile, there are liabilities that companies may face by relying on it, and the use of certain technology solutions may simplify the timekeeping and payroll process so that timesheet rounding is no longer necessary.
When to use timesheet rounding
Timesheet rounding may or may not be the right call for an organization depending on several factors, Cardman said. Using this method is a good call when it makes payroll easier, especially for organizations that cannot afford to purchase software. Many organizations still use traditional punch clocks, he added.
Similarly, timesheet rounding can make invoicing easier if a company is working with clients. A round number like 34.5 hours may sound better to clients than something specific like 34.5125, Cardman said.
Rounding either needs to be neutral or favor employees. It can’t favor employers, Cardman said. The idea here is so that employers don’t use it as a way to pay less wages to workers but to make numbers easier to work with.
Avoid liability when using this practice
This type of lawsuit is more rare than others, but it does happen, Cardman said, citing 2016’s Corbin v. Time Warner Entertainment.
“Just because there isn’t a whole lot of litigation in this area, it doesn’t mean that you shouldn’t be careful, especially because you don’t stand to save all that much money,” Cardman said. “You shouldn’t be looking at it as a way to save money at all. And you don’t stand to gain that much of a benefit in terms of your bookkeeping, billing, invoicing or whatever it is that you’re trying to get out of this relative to what your legal exposure could be.”
Setting legal precedent
The de minimis doctrine is important in timesheet rounding cases because it asserts that the law can disregard infrequent or insignificant periods of time that would be impractical to precisely record, Cardman said.
In Corbin v. Time Warner Entertainment, for example, the plaintiff alleged that he lost $15.02 because of his company’s compensation policy, and the court ended up rejecting the plaintiff’s argument that the company’s rounding policy violated the federal rounding regulation.
Meanwhile, Starbucks saw a different outcome in Troester v. Starbucks Corp. The plaintiff would clock out at night and then still have a few tasks to complete to close down the store. It added up to a short period of time every night, Cardman said. Starbucks wanted to exclude that time under the de minimis doctrine, but along with potential overtime pay, the costs added up. According to the California Employment Law Report, over 17 months the plaintiff did not earn wages on 12 hours and 50 minutes of work, adding up to $102.67 in wages.
The article also suggests that to avoid situations like this, organizations can consider alternatives like “structuring work so that employees would not have to work before or after clocking out” and “using technology to have time tracking tools to more accurately record employee’s time.”
If an organization has a timekeeping system and an accounting system that allows them to track people’s hours and do payroll correctly, there’s no reason to do timesheet rounding, Cardman said.
If there’s an option for the user to choose an option or check a box on the HR system that allows them to choose whether they want to keep the rounding function on or off, they can choose “off” and do timekeeping as accurately as possible, he suggested.
“It saves you the legal exposure, and you shouldn’t have been doing it with an eye toward saving money anyway,” he added. “The only reason to do it is to save yourself a headache when it comes to bookkeeping.”
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