This is why I hate timeclock rounding policies

The rounding of an employee's clock-ins and clock-out to the nearest of a specific increment of time is perfectly legal. It's also a perfectly terrible idea.

Let me explain.

The Fair Labor Standards Act requires that an employer pay its non-exempt employees for all hours actually worked. As a means of ease in calculating time worked, the FLSA's regulations permit an employer to "round" an employee's clocked start and end times, "provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked."

That's exactly what St. Luke's Health System thought it was doing when it implemented its rounding system for its employees. Even thought its automated timekeeping system records the exact time employees clock in and out and the beginning and end of their shifts, the hospital's system applied a rounding policy such that any employee who clocked in within six minutes a shift's scheduled start or end would get rounded to the shift time for compensation purposes.

Torri Houston, a former employee, sued on behalf of herself and similarly situated employees, claiming that the rounding policy was illegal by failing to fully compensate them for all work performed. The employer, on the other hand, argued that the rounding policy was lawful under the FLSA because it was applied neutrally by adding and subtracting time to employees over time.

The 8th Circuit disagreed, emphasizing that when examined over time, the rounding benefited the employer more than it benefited the employees (50 percent of the time versus 33 percent of the time). But the real point of the opinion (and today's post) comes from this quote from the 8th Circuit's opinion:

The rounding regulation does not require rounding; it permits it. That permission comes with conditions: chiefly, that the rounding "will not result" in systematic or routine underpayment "over a period of time" for work performed. Here, with automated, electronic timing and accounting, this is easy to verify because the system records the exact time that an employee clocks in or out. There is no administrative hassle. This is not like the old days of punch cards and hand arithmetic.

The Fair Labor Standards Act is a dinosaur. It was written in the 1930s to remedy sweatshops. Its drafters could not ever have imagined the law would have to grapple with computerized time tracking systems. Which is exactly why rounding policies don't make a lot of of sense anymore. As the 8th Circuit correctly pointed out, technology has made them irrelevant. We no longer need punch cards and math because we have computers and electronic accounting. Or, as the 8th Circuit also stated, just because something is legal doesn't mean it's a good idea.