7-Minute Rule for Timekeeping

Clocking in and out for work can be anxiety-inducing, especially when you're late or trying to leave early to avoid traffic. But imprecise time cards also present challenges for employers. Turning those few minutes on time cards into employee pay is often complex for many timekeeping and payroll systems.

Some employers make these time infractions easier to manage by taking advantage of the rounding rules found in the Fair Labor Standards Act (FLSA). The FLSA is an important employment law. The federal law and its regulations lay out standards for an employer's obligations for calculating employee hours.

Rounding stems from the idea that most employees will be compensated accurately for their total hours worked, give or take a few minutes. Of course, businesses can also use exact time, which does not round the clock-in or clock-out time up or down.

Time Clock Rounding and the FLSA

The FLSA allows time clock rounding. Employers can round work time to the nearest increment, up to a quarter of an hour. Time can be rounded up or down to the nearest five minutes, six minutes, or 15 minutes.

The seven-minute rule allows employers to round employee time to the nearest quarter-hour. The seven-minute rule is a payroll rule that allows employers to round down employee time of 1-7 minutes. However, employee work time of 8-14 minutes must be rounded up and counted as a quarter-hour of work.

Employers most often round work time to the nearest quarter of an hour because the practice makes internal and external timekeeping easier.

The seven-minute rule applies to periods of time that occur on occasion. Employers cannot use this type of rounding of time records to change the number of hours worked to regularly get extra minutes of unpaid work or avoid overtime pay.

Employers must use caution even though quarter-hour rounding of employee timesheets is common and acceptable under the FLSA. Home Depot changed its rounding policy for hourly employees in 2023. The nationwide home improvement retailer agreed to pay nonexempt employees to the nearest minute based on time punches. Previously, the company had a quarter-hour rounding system. The policy change came after workers filed wage and hour lawsuits, including a class-action lawsuit by California employees. The plaintiffs alleged they lost pay because of the company's quarter-hour rounding system.

The “seven-minute rule" usually looks something like this during a workday:

This is understandably frustrating for employees who are just a few minutes late. They are now missing 15-minute increments from their paycheck or must make up time by the end of the workweek.

If a 40-hour-per-week employee clocks in at 8:08 a.m. each morning during a workweek, they will be marked for 8:15 a.m. instead. Over a two-week pay period, this can result in missing out on 2.5 hours of work on a paycheck, even though their actual time missed was less than an hour and a half. This missing time and money can easily add up over time.

State Laws on Rounding

Employers must also pay attention to state laws. Most states follow federal policy on rounding. Some states forbid rounding. Some states impose extra restrictions on rounding. For example, Washington state does not allow employers to round when calculating lunch breaks, meal breaks, and rest breaks.

Cautions for Employers

Employers who can track employee time to the minute probably shouldn't use rounding methods. Some experts suggest that employers move away from rounding.

Businesses that round employee time should conduct regular audits to make sure the practice doesn't lead to rounding in the employer's favor. Courts tend to rule in employees' favor when this happens. An employer's rounding practice must average over time to compensate employees for all the time they work.

Steps to Take for Unpaid Wages

If you are an employee, and this is happening to you, it may be time to seek legal advice from an attorney about filing a wage and hour claim with the U.S. Department of Labor or your state's labor department.

If your employer explained their time policy to you, and it supports state and federal law, you may not have a case against them for rounding up or down on clock-in times.

However, if you are not being paid for time worked, or your employer is preventing employees from clocking in on time, you should speak with an employment attorney focusing on wage and hour laws.

You can also do your own research on your state, county, and employer through the U.S. Department of Labor website.

You have the right to be paid for time worked. An experienced attorney can discuss your time-clock situation and explain the possible outcomes of starting a case against your employer. Many offer free consultations to help employees understand their wage and hour pay situation.