Rounding Time at Work? Here are 594,143 Reasons to Make Sure You’re Doing It Legally.

 

A recent DOL enforcement action shows how routine rounding practices can spiral into serious legal exposure. This post breaks down one employer’s nearly $600,000 mistake—and explains what the FLSA really permits when it comes to rounding work time.

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TL;DR: A construction contractor just had to pay nearly $600,000 in back wages and damages after the Department of Labor found systemic underpayment of overtime. A key issue? The company’s rounding and timekeeping practices. Rounding work time can be legal—but only if it doesn’t shortchange employees over time. Here’s what every employer needs to know.

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A Costly Lesson in Cutting Corners

The U.S. Department of Labor recently recovered $594,143 in back wages and liquidated damages for 59 construction workers in Michigan and Mississippi. According to the Department of Labor, the company violated the Fair Labor Standards Act (FLSA) by failing to pay overtime and using timekeeping practices — specifically improper rounding methods — that didn’t capture all hours worked.

That last bit is what employers should pay attention to. Because buried in this enforcement action is a reminder: even small, well-intentioned rounding errors can lead to big liabilities.

The Law on Rounding Time: It’s Not What You Think

Let’s be clear: the FLSA doesn’t ban rounding work time. But the Department of Labor has rules.

Under 29 CFR § 785.48(b), rounding time to the nearest 5 minutes, tenth, or quarter-hour is allowed—but only if it averages out so employees are fully paid for all the time they actually work.

“This practice of computing working time will be accepted, 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.”

The Department of Labor provides additional guidance on acceptable rounding practices. Consider a situation where an employer reduces employees’ pay by a full quarter hour (15 minutes) if they start work more than seven minutes late for their scheduled shift. This practice is a-ok under the FLSA as long as employees’ working time is rounded up to a full quarter hour if they begin working between 8 to 14 minutes before their scheduled start time or if they work between 8 to 14 minutes past their scheduled end time.

Rounding Time: Practical Tips for Employers

So what does all this mean in practice? If you’re rounding time, it must be neutral—not just favoring the employer. You can’t disregard time actually worked just because it’s outside a scheduled shift, and your system must fairly compensate employees over time.

Here’s how to stay compliant:

✅ Audit your timekeeping data.
Check whether rounding consistently benefits the employer or the employee. If it’s always going one way, you’ve got a problem.

✅ Avoid rounding when tech can do better.
With modern time-tracking software, precise tracking is easier than ever. The old “round to the nearest 15 minutes” model may no longer make sense.

✅ Train your managers.
If workers are clocking in early or staying late and doing any work, they need to be paid for that time. You can’t round away real work.

✅ Stay consistent.
If you round, round both clock-ins and clock-outs—and do it impartially.

✅ Review applicable state laws.
Some states impose stricter limits—or even prohibit—certain rounding practices. Make sure your approach complies with both federal and state wage and hour laws.

One Last Thing

The DOL also highlighted other FLSA issues in this case, including unpaid overtime. But it’s the rounding piece that often flies under the radar—until a wage and hour investigation lands on your desk.

So if your system “rounds,” it might be time to take a closer look.

Because the next $594,000 compliance mistake? It could be yours.