The maximum rounding increment allowed by FLSA is 15 minutes so anything greater than that exposes your business to potential legal trouble. If it’s impossible to ensure a “neutral” outcome, rounding should favor the employee Time clock rounding should be performed in a way that doesn’t favor the employer but rather “averages out so that the employees are fully compensated for all the time they actually work”. If you choose to round to 15-minute increments, you need to observe the 7-minute rule for every 1 to 7 minutes that are rounded down, there is a corresponding timeframe of 8 to 14 minutes that are rounded up to the nearest quarter-hour and counted towards total work time. Here are a few things to keep in mind when rounding work hours: This method can’t be used as a means of cutting labor costs or favor the employer in any way. The Department of Labor (DOL) allows employers to round time up or down within 15-minute increments, but there’s a catch. And yet, some small-business owners still use rounding to calculate their employees’ wages. These days, thanks to GPS-enabled time tracking and payroll automation, fishing for small deviations from regular clock-ins and clock-outs has become much easier. Depending on the type of your business and general industry practices, you can round work hours in 5-minute and 15-minute increments or to 1/10th of an hour (more on that in a moment). In a nutshell, time clock rounding means that the actual work hours of your nonexempt employees are rounded up or down by set increments. “So, what does time clock rounding mean?” This can be done either by asking employees to write their hours down, using regular time clocks or through time-tracking software. Under the Fair Labor Standards Act (FLSA), all employers are required to track and store employee time records completely and accurately. Time clock rounding helped streamline calculating wages and save chunks of time in the process.īut does it still make sense today? What Is Time Clock Rounding? We use the MAX Function so that we do not end up with Negative hours where the Employee has worked overtime as if the result returns a negative, then the MAX function will return a zero.Back in the day when handling payroll was pretty much a pen-and-paper process, employers would use rounding to account for odd minutes and seconds outside the regular work schedule. The regular hours are calculated based on the total hours, and the overtime worked. Once the SUM gets to more than 40 hours, Overtime hours are put into the Overtime column as an increasing total. As the SUM range is increased, so the hours worked is increased. 
As you copy this formula down to the bottom of the table, you will notice that the SUM function adds up all the Hours worked in column E. The first part of the first range of the SUM Function is an absolute, while the second part is not.
The overtime is calculated once a person works more than 40 hours a week. We can use the IF, SUM and MAX Functions to calculate the hours worked in a weekly broken down by regular time and overtime. To calculate the overtime, we can get the rest of the hours worked using this formula below: =IF((D3-C3)*24>$H$13,((D3-C3)*24)-$H$13,0)Ĭalculate Hours Worked in a Weekly Timesheet If the employee has worked more than 8 hours, the formula will only return a maximum of 8 hours. The following formula calculates the Normal time worked in the day. In the example above, the standard time is 8 hours. We can use the same type of formula to calculate overtime.
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