When it comes to rounding hours, staying compliant can be a slippery slope. In a state like California, where labor laws are in high favor of employees, business owners and employers should be aware of the strict rounding policies.
Though rounding policies are allowed under Federal law, the Code of Federal Regulations states that rounding policies are only allowed, when presumably, the policy averages out the employee’s clock times, so that they are fully compensated for all the time they actually worked. Rounding policies should never withhold pay from employees and when used for enforcement purposes, rounding policies can only be used in a manner that will not “result, over a period of time, [to fail to] compensate employees properly for all the time they have actually worked.”
The first step of properly managing employee hours and pay, is to have the proper tracking methods.
As an employer in California, business owners are subject to keeping accurate records of information with respect to each of their employees with some of the following:
Employee records are also required to be accessible to employees upon reasonable request. This, especially when rounding hours or for making clock changes. As a precaution, ensure that both you, and your employees are under the same agreement in regards to start and end times, the best practice is to make sure employees sign off on any clock changes. For example, grace periods. In California, there are no mandatory grace periods. But as an employer you may choose to provide an employee with a 10 minute grace period for when they clock out. This grace period is voluntary and you’ve done so to grant employees flexibility when clocking in and out. However, the rounding policy you’ve adopted is to round to the nearest 10th of an hour (every 6 minutes to the hour).
Here's an example, if Joe is scheduled from 10am to 5pm, and he clocks in at 10:02am, you’ll round down to 10:00am. If he had clocked in at 9:58am, you’ll round up to 10:00am. The key here, is to ensure that Joe does not work within the 2 minutes he clocked in early. And if you had asked Joe to work two minutes, you would not use the rounding policy and pay him for all time worked. Any changes to an employees clocked hours, without mutual understanding via heir verbal agreement or written permission, can cause a ripple effect to a class action lawsuit. Especially if you're adjusting and rounding hours without an employee’s knowledge or understanding.
And making adjustments to clock entries or employee pay can be for a lot of reasons. Whether employees clock out after they've actually stopped working, or even if someone just simply forgot to clock out, any changes to employee hours (and ultimately their pay) should be verified and mutually agreed too. Meaning, adjustments can’t be made on a whim, or in one-off cases. Your clock rounding policies should be fair, transparent and honest. If you change employee’s clock time without their understanding, they have every right to request their employee records and move forward with a class action lawsuit if they’ve found that their hours have been unfairly rounded or adjusted.
In an employee friendly state like California, procedures like clock approvals records need to be employee friendly too! It may seem like you’re chasing your employees for approval but it’s better than dealing with a lawsuit. The key to maintaining and strengthening compliance? Streamline your approval process and place approvals into your employees hands.
Download our free employee clock adjustment form below to cover all your bases! Or better yet, book a free demo to see how we streamline clock edits with digital signatures here. Saving paper and time? Sounds good to us!
This document is provided by Push Technologies Inc. ("Push Operations") for information purposes only. This is not an official or legal document and should not be taken as legal advice. Push Operations does not guarantee or warrant the accuracy or completeness of the information provided. For the most accurate and up-to-date information, please check with the proper governing authority.
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