Time Clock Rounding: Best Practices, Methods, and Rules to Follow
Time clock rounding (also called punch rounding) refers to rounding employees’ clock in and clock out times to a set interval, such as 5-minute rounding. So if someone clocks in at 6:57 am, their clock in time can get rounded up to 7:00 am.
The benefits of a well-implemented time rounding policy include:
- Simplified payroll: Time entries that are rounded to five-minute or ten-minute intervals make it easier to correctly calculate wages for certain payroll methods.
- Grace periods: Sometimes employees run a few minutes late for unavoidable reasons, ranging from bad traffic to a line for the kiosk. Punch rounding avoids penalizing employees for factors outside their control, improving morale.
- Fairness and transparency: If you communicate your punch rounding policy to employees and apply it equitably, it will help them understand how their time is tracked, reducing the odds of miscommunication or resentment.
But when done improperly, time clock rounding can become a form of wage theft, leaving business owners open to lawsuits.
In this article, we’ll begin with the specifics of time clock rounding: its legal status in the US, accepted methods for rounding, and best practices. Then we’ll go over how our time clock software Buddy Punch handles time clock rounding, plus benefits such as accurate employee time tracking, easily shareable schedules, and a streamlined payroll system.
To learn more about Buddy Punch, visit our site or request a demo today.
Time Clock Rounding Legal Status
Before we continue, please keep in mind that this is not legal advice. This is not a legal blog written by attorneys, but instead a report of the most applicable information that we could find regarding time clock rounding. The laws mentioned below are subject to change.
Within the US, punch rounding is legal as long as it meets the following two criteria under the Fair Labor Standards Act (FLSA):
- Punches can’t be rounded in significant increments, which is generally held to be increments greater than 15 minutes (i.e., no more than 15-minute rounding).
- Timesheet rounding must have a neutral or favorable impact on employees (e.g., employers can’t round up when employees clock in and round down when they clock out, as this would have a negative overall impact on employee wages).
States within the US may have additional labor laws or other considerations regarding punch rounding. For example, while punch rounding is legal in California as of writing, the state generally discourages punch rounding when business owners are able to track employee time with greater accuracy than 15-minute intervals (for example, with a time tracking app).
The logic is that if employers can track the exact time down to the minute, employees should be compensated with the same level of precision. Therefore, it’s important to keep informed about all pertinent local and state regulations as well as federal ones when you decide whether to implement time clock rounding. A good place to start is your state’s department of labor website.
Methods for Time Clock Rounding
When you implement time clock rounding, you must be both consistent and specific with how punches get rounded, which means settling on a standard time clock rounding rule. Here are three common methods for time clock rounding:
1. The 15 Minute Rule
With this method, punch times get rounded to the nearest quarter hour. The 15 Minute Rule is also called the 7 minute rule or the 7/8 rule because the breakpoints — the point in time before which times are rounded down and after which times are rounded up — fall at the 7 and 8 minute marks. In other words, a clock in time of 9:07 am would get rounded to 9:00 am, while a clock in time of 9:08 am would get rounded to 9:15 am.
2. The Six Minute Rule
Under the Six Minute Rule, times get rounded to the nearest 6-minute mark (i.e., tenth of an hour). Here’s an example of the increments for signins between the hours of nine and ten am:
- 9:00 am
- 9:06 am
- 9:12 am
- 9:18 am
- 9:24 am
- 9:30 am
- 9:36 am
- 9:42 am
- 9:48 am
- 9:54 am
- 10:00 am
So a clock in time of 9:07 am or 9:08 am would get rounded to 9:06 am, but 9:09 am could get rounded to 9:12 am. While this method doesn’t result in multiples of five like the other two rules, it does take advantage of the sixty-minute hour being a factor of six. It does, however, mean the three-minute breakpoint could be rounded either way, necessitating a policy decision for handling breakpoint rounding.
3. The Five Minute Rule
The Five Minute Rule is arguably the most intuitive in that punch times get rounded to the nearest 5-minute mark. For example, a start time of 9:07 am would get rounded to 9:05 am, while a start time of 9:08 am would get rounded to 9:10 am.
Time Clock Rounding: Best Practices
Regardless of which rule you use, a time clock policy will be more successful if you follow these best practices:
- Have a simple, standard policy.
- Make sure your policy is neutral to positive for employees.
- Be transparent about your policy.
- Enforce it consistently.
Have a Simple, Standard Policy
While having a standard policy might seem obvious, it’s often tempting to experiment with different rules to figure out which one you like best or to make it needlessly complex. Both these actions will result in confused employees making rounding errors, leading to incorrect timesheets and lowered morale.
Make Sure Your Policy Is Neutral to Positive for Employees
In addition to being required by federal law, fair policies are a critical component of employee satisfaction. Planning ahead is the best way to ensure your rounding practices are equitable both in theory and in practice. Considerations for ensuring fairness include:
- Any unavoidable barriers to clocking in or out in a timely fashion (e.g., a line to use a physical time clock every morning).
- Whether to use the same rounding rule for clocking in and clocking out.
- The direction of rounding (i.e., up or down) with regards to arriving and leaving work.
- How to ensure compliance with the policy.
Be Transparent About Your Policy
Ensuring your employees know and understand your time clock rounding policy has two beneficial effects: It increases compliance with the policy and it prevents employees from assuming they’re being nickel-and-dimed. Be sure to communicate your policy to your employees via your usual channels for team communication; if you have a kiosk, ledger, or physical time clock, it will also help to keep a copy of the policy nearby.
Enforce Your Policy Consistently
An employee time clock rounding policy that only applies to some employees, or that’s only implemented some of the time, results in more errors and more work than not having a punch rounding policy at all. But if you enforce your policy consistently and equitably, it will quickly become a habit for your workforce.
Easy Time Clock Rounding with Buddy Punch
Our time clock software offers the option to enable automatic punch rounding when workers clock in and out. This includes:
- Specifying whether punches are rounded based on hours worked or with regard to scheduled shift times.
- Designating the rounding increment (e.g. a quarter of an hour).
- Setting different rules for clocking in and clocking out.
- Customizing time clock policies by location.
For example, consider a company where Worksite 1 is an office where employees clock in from their computers and Worksite 2 is a construction site with a shared time clock kiosk. Since employees are likely to get delayed in line when punching in at Worksite 2, the punch rounding setting can be used to give these employees a grace period for clocking in.
Buddy Punch: Time Tracking, Scheduling, Payroll
Buddy Punch is an all-in-one cloud-based time tracking software with scheduling and payroll functionality. Our product lets you schedule shifts, track and record employee work hours, and calculate payroll automatically based on their timesheets. Buddy Punch improves:
- Accuracy of timekeeping and therefore of payroll.
- Efficiency via centralization of time tracking, scheduling, and payroll.
- Accountability with mutual transparency and with tools to combat time theft.
Keep reading to learn more or visit our site to try it free today.
Accurate Time Tracking with Buddy Punch
Our cloud-based software Buddy Punch is compatible with most popular devices and operating systems, so employees can clock in from kiosks or from their own phones.
Once employees clock in, Buddy Punch accurately measures their hours worked and, as discussed above, can apply punch rounding. The admin dashboard also has user-friendly systems for flagging and correcting timesheet errors.
In addition, most of its features can be customized by location, department, or position, giving you additional flexibility and control.
Accountability Tools Deter Time Theft
Time clock rounding policies can do a lot of things, but they can’t ensure your employees are on-site when they clock in. Buddy Punch, on the other hand, has tools to prevent time theft, boosting transparency and accountability.
GPS
Our GPS feature is only active when employees are clocked in, balancing accountability with privacy.
When you use the real-time location tracking tool, you can check the log for past locations (including GPS timestamps for punches) or you can monitor employee movements in real-time. This has additional utility for drivers, since location tracking can be helpful in emergency situations.
Learn more about our GPS feature.
Geofencing
Buddy Punch lets you set a geographic radius, or geofence, around each of your workplaces. Employees must be within the geofence to clock in. If they’re too far away, they’ll receive an error message prompting them to get closer before trying again.
Learn more about our Geofencing feature.
IP Address Locking
With IP address locking, employees can only clock in from devices connected to their workplace’s internet, ensuring they’re actually at work when they say they are.
Learn more about our IP Address Lock feature.
Tracking and Managing Paid Time Off
Because Buddy Punch tracks work time, it can also track the accrual of PTO and other time off. First, managers set up accrual rules within Buddy Punch, including whether certain employees or departments accrue PTO at different rates (for instance, whether more senior employees get more PTO).
Once the rules are set up, Buddy Punch automatically calculates and tracks leave accrual based on hours worked. Employees can view and request accrued time off through their self-service portal, keeping everyone in the loop.
Reduce Human Error with Automatic Breaks
The more often employees have to clock in and out throughout the day, the more likely they are to forget. Therefore, Buddy Punch offers an automatic breaks feature in which breaks are automatically added to employee timesheets.
For example, it’s possible to set up a half-hour lunch break that starts once an employee has worked for three hours on a given day. These breaks, like many of Buddy Punch’s other features, can be tailored by person, role, department, or location to account for company policy.
Therefore, the automatic breaks feature also assists with transparency by letting employees know how many breaks they’re entitled to during their shift.
Overtime Alerts Prevent Unplanned Labor Costs
If you use Buddy Punch to track time, you can also use it to track and calculate overtime. If you enable overtime alerts, both the employee and their manager can be notified when employees exceed their regular hours, giving the employee the chance to clock out and the manager the chance to rework the schedule. Therefore, these alerts cut down on costly unplanned overtime pay.
Learn more about our Overtime Calculations feature.
User-Friendly Team Scheduling
Buddy Punch’s scheduling feature is based on an intuitive drag-and-drop calendar interface where employee availability is in full view the whole time. You can use customizable template blocks to create schedules, set up recurring shifts, alert employees to their hours, and facilitate shift trades.
Customizable by Location, Role, and Department
To make sure you have all your roles covered and all employees reporting to the right place, Buddy Punch lets you assign people, positions, departments, and locations to each shift.
Make Sure Employees Only Work When They’re Supposed To
Because punch rounding can’t legally be used for significant time increments, it’s important to make sure employees aren’t significantly late or early for their shifts.
Buddy Punch lets you restrict clocking in and out to a set amount of time before and after a shift, ensuring employees only work when they’re supposed to.
Learn more about our Punch Rounding feature.
Automatically Clock Employees Out after Their Shift
It’s easy for employees to forget to clock out at the end of the workday, but this can lead to timesheet errors or even accidental time theft. To reduce these costly errors, Buddy Punch offers the automatic punch out feature. When managers activate it, they set an amount of time after a scheduled shift for employees to be clocked out if they haven’t already.
Built-In Shift Swapping
Employees can’t always make their assigned shift, so Buddy Punch offers a built-in shift swapping feature. Workers can reach out to each other to arrange a cover; once they reach an agreement, the proposal is sent to their manager for approval. This ensures everyone stays in the loop and keeps communication as efficient and streamlined as possible.
Learn more about how to implement shift swapping.
Calculate Payroll Directly from Time Sheets
If you’re satisfied with your current payroll process, Buddy Punch offers a number of integrations with popular accounting software like QuickBooks and Gusto, making it easy to export timecards into your payroll system.
This lets you streamline payroll calculations by exporting accurate timesheets directly into your payroll provider. If we don’t have an integration with your current payroll system, you can also export your timesheets out of Buddy Punch as an Excel file.
Buddy Punch Payroll
We also offer our own payroll software, so you can track time worked and issue payroll all with one tool.
When you use Buddy Punch payroll software, you get key payroll features such as:
- Tracking business expenses
- Filing taxes
- Paying via direct deposit
Track Expenses
Within Buddy Punch Payroll, you can track business expenses like:
- Group Life Term
- Reimbursements
- Non-hourly Regular Pay
- Paycheck Tips
- Bonuses
- Commission
- Cash Tips
- Severance Pay
In addition to ensuring your payroll is accurate, this helps with tax reporting and with budgeting.
File Taxes
Once you finalize payroll, Buddy Punch handles filing federal, state, and local taxes for your business. It also sends relevant tax forms such as W2s to your workers.
Direct Deposit
Employees can set up their payment preferences and information within their self-service payroll. If they choose direct deposit, Buddy Punch automatically disburses their wages when you file payroll.
If you’re interested in using Buddy Punch to handle time clock rounding, time tracking, scheduling, and payroll, visit our site to explore pricing options or try it free today.
Real Customers Reviews about Buddy Punch
At the time of this writing, Buddy Punch has over 980 reviews on Capterra with an average rating of 4.8/5. Capterra is a non-biased, third-party review site where you can see how real businesses are reviewing Buddy Punch’s software.
You can see various reviews about using Buddy Punch’s time clock features.
“What I love most about Buddy Punch is how simple it is for employees to clock in and out, add their lunch breaks, and write notes about their shifts. I also love how easy it is for me to import it into QuickBooks and pay payroll with it! Before I used Buddy Punch I was keeping time manually with 3 employees and it drove me crazy. Now I have over a dozen employees and I do not know what I would do without this software.”
Click here to read the full review.
“Buddy Punch makes employee time tracking very easy. Employees just need to be within a geofence (if one is set up) log in and punch in/punch out. They don’t have to jump through endless steps for something that should be straightforward. The user interface is also very user friendly.”
Click here to read the full review.
“I love how quick and easy it is to punch in and out. It does not make it difficult to keep track of your hours and where you punch in and out. It also keeps you on track and accountable for your work day, and I really appreciate that.”
Read the full review here.
“It’s very easy to manage, and our employees must punch in and out within the GEO fence to eliminate punching errors. It’s easy to see the time before your eyes, easily add or delete someone, and make simple time changes and PTO additions.”
Read the full review here.
To learn more about using Buddy Punch for your own team:
