Time Clock Rounding: Best Practices and Rules in 2025

Time clock rounding is a common technique that rounds employees’ clock-in and clock-out times to standardize work hour calculations and simplify payroll processing. While this method emerged before modern time-tracking software, it has faced concerns for its legality and transparency, as it might affect employees’ benefits.

So, how does time clock rounding work? Is it still needed today? Is time clock rounding legal? Take a look at our quick guide below to learn more.

What is time clock rounding?

Time clock rounding is the practice of adjusting an employee’s actual work hours up or down to the nearest set time block, typically in minutes or percentages of an hour.

For example, when an employee clocks in at 8:04 and out at 3:57, the manager can round the time tracking record to 8:00 and 4:00. Depending on the rule applied, the time increments will vary, and thus, the rounding will be different.

With today’s advances in time and attendance-tracking apps, time clock rounding seems to be a less favorable method for managing employees’ working hours. But for some small businesses, this practice is still useful for tracking working time and processing payroll.

In the US, FLSA (The Fair Labor Standards Act) approves three types of time clock rounding rules:

• 15-minute rounding
• 6-minute rounding
• 5-minute rounding

While all of them work the same way, each practice will be appropriate for certain businesses.

Time clock rounding rules and charts

Time clock 15-minute rounding rule (7-minute rule)

The 15-minute rule means rounding the time up or down to the nearest quarter-hour. This is the most common practice in rounding time clock.

According to this rule, the clock-in and clock-out times will be rounded to either :00, :15, :30 or :45.

To apply the 15-minute rounding rule, you should follow the 7-minute time clock rule. The 7-minute time clock rule is essentially the same as the 15-minute rule as it refers to rounding employee times to the nearest 15-minute increment.

The 7-minute time clock rule uses the 7-minute mark as a reference point for rounding up or down. If an employee clocks in within the first 7 minutes of a 15-minute block, their time is rounded down to the previous quarter-hour. If they clock in after the 7-minute mark, it’s rounded up to the next quarter-hour.

For example, when employees clock in at 8:07 AM, their time is rounded to 8:00 AM. If they clock in at 8:08 AM, the time will be rounded up to 8:15 AM.

Here is a reference chart for 15-minute time clock rounding method: 

Time clock 6-minute rounding rule

The 6-minute rounding rule is the practice of rounding the time up or down to the nearest tenth of an hour. It means the clock-in and clock-out times will be rounded to :00, :06, :12, and so on.

In the 6-minute rounding rule, each hour is divided into 10 segments of 6 minutes. If an employee clocks in or out within the first 3 minutes of a 6-minute segment, the time rounds down. If they clock in during the last 3 minutes of a segment, the time rounds up to the next 6-minute increment.

Suppose an employee starts their shift at 9:02 AM, the system will record it as 9:00 AM. If they begin work at 9:04 AM, their start time will be adjusted to 9:06 AM.

Below is the 6-minute time clock rounding chart for your reference:

Time clock 5-minute rounding rule

The 5-minute rounding rule is set to round an employee’s punch-in and punch-out time to the nearest 5-minute increments. Following this rule, the clocking time is adjusted to :00, :05, :10, and so on.

In the 5-minute rounding rule, one hour is divided into 12 segments of 5 minutes with a 2.5-minute threshold. If an employee clocks in within the first 2.5 minutes of a 5-minute segment, their time is rounded down. If they clock in after that threshold, their time is rounded up.

For example, when employees begin their shift at 10:02 AM, their time is recorded as 10:00 AM in the system. On the other hand, if they start at 10:03 AM, the system adjusts their start time to 10:05 AM.

Take a look at the 5-minute time clock rounding chart below for more details:

Time clock rounding rules by states

The time clock rounding rules approved by FLSA are federal, which means they are applied all over the US. But in some states, there could be different or extra rules that businesses should pay attention to. Here are some examples:

• Oregon: Oregon requires that employees be paid for all hours worked. While employers may apply a rounding system, they also need to implement precautions to ensure employees are paid for all work time each pay period. For example, employers could adjust hours at the end of the pay period to capture hours worked that the rounding system may have excluded.
• California: In 2021, the California Supreme Court addressed the issue of time rounding in the context of meal periods in Donohue v. AMN Services, LLC. As a result, the state ruled that employers cannot round time punches in the context of meal periods. It is emphasized that meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective.
• Washington: According to the state’s rules, time clock rounding is not permitted for meals and rest periods. Employers cannot round, deduct, or average any time from these breaks.

Why is time clock rounding necessary?

Time clock rounding is an essential method used in small businesses where the need for time-tracking tools is not prioritized. This practice brings several benefits because it:

• Simplifies the payroll process
• Reduces calculator errors
• Saves administrative time
• Helps manage late clock-ins and early clock-outs
• Reduces time theft

With time clock rounding, businesses can save a lot of labor costs and time in managing employees’ working hours.

The risks of implementing time clock rounding 

Time clock rounding helps to ease the burden of administrative tasks but it also carries many risks at the same time. If time clock rounding is not done carefully, it can lead to many problems relating to legality or cheating.

Legal risks

Time clock rounding can be unfair to workers if not carried out properly. This unfairness can lead to employees taking legal action against companies.

To avoid potential lawsuits, managers must conduct thorough research and understand regulations before implementing any rounding system. Clear policies and proper implementation are essential to protect both the company and its employees.

Time theft concerns

Time theft becomes a significant risk when employees learn to manipulate rounding rules to their advantage. For example, an employee consistently clocking in at 8:07 will be rounded to 8:00, resulting in 7 paid but unworked minutes.

These small time differences build up over weeks and months of employment. The increased costs from unworked but paid time can cause financial losses for businesses.

Best practices for time clock rounding

To ensure your time clock management stays compliant with the rules and is fair to employees, follow these best practices for time clock rounding:

Be open and clear about your time clock rounding policy

Be open and clear about how your time clock rounding system works. Don’t just put the rules in place—take time to explain to your employees why you use this system and how it works.

Show them real examples of how their clock-in and clock-out times will be rounded. Put this information where everyone can easily find it, like on bulletin boards, on your company’s internal website, or send it through emails.

When employees understand exactly how their work hours are counted, they’re more likely to trust the system and feel they’re being treated fairly. Being clear about your time rounding rules helps avoid confusion and complaints, and shows your workers that you value honesty in how you handle their work hours.

Stay neutral and ensure fairness

It is important to remember that time clock rounding is just for easier workforce management and payroll processing. You should ensure the rounding is neutral to maintain legal compliance and fairness in your time-tracking system.

When workers are underpaid due to rounding, you must adjust their time records and provide back pay immediately. A thorough review of past pay periods is needed to identify any similar underpayment issues.

The current rounding rules should then be evaluated and modified to prevent future underpayment problems. This may involve adjusting the rounding intervals, implementing stricter timekeeping policies, or switching to a more accurate time-tracking system.

If employees manipulate the system for extra pay, consider adjusting the time increment thresholds. Monitor their clock-in times closely and revise rounding rules if this becomes a widespread problem.

Regular audit of time clock rounding practices

Regular audits of the rounding help identify potential issues before they become bigger problems. These audits should examine patterns in time records, comparing actual clock times with rounded times to ensure the system stays neutral over time.

Look for any differences that might indicate systematic issues, such as consistent rounding in one direction or particular departments showing unusual patterns. Review payroll records to verify that overtime calculations properly incorporate rounded times and that minimum wage requirements are consistently met.

Q&A

How does time clock rounding work?

Time clock rounding simplifies employee clock-in and clock-out times by rounding to the nearest 15, 6, or 5 minutes based on specific thresholds.

Is time clock rounding legal?

Yes. Time clock rounding is legal under the Fair Labor Standards Act (FLSA) as long as it:

• Doesn’t consistently favor the employer
• Is used in a fair and neutral way
• Averages out to properly pay employees for all time worked

Can an employer round down your hours?

Your employer can round down your hours as long as the rounding must:

• Be fair and neutral
• Not result in consistent underpayment
• Follow established rounding rules consistently

Automatic time clock rounding tools

Rounding the time clock manually can be a very time-consuming task when you manage a large number of employees. This is when time clock rounding software is a better solution for managing employees’ working time and simplifying the payroll process.

A time clock rounding software is a tool that can automatically apply your chosen rounding rules to all employee time entries. These systems eliminate calculation errors and reduce administrative workload while ensuring consistent application of your rounding policies. The best solutions should also maintain detailed records of both actual and rounded times for compliance and auditing purposes.

A better way for time tracking and automated time clock rounding – Camelo

Camelo is a scheduling app with time tracking feature that can help businesses manage employees’ working time more effectively. Camelo’s accurate time tracking eliminates the risks associated with rounding while still maintaining efficient payroll processing and workforce management.

For businesses that need time-clock rounding, Camelo offers options for customizing rounding rules to align with their demands. Managers can easily set up rounding increments within the platform, ensuring that time tracking remains fair and transparent for all employees.

Time clock rounding options on Camelo include rounding start time, end time, and break time of employees’ working hours.

With the right tool, businesses can avoid the risks of manual rounding while ensuring precise and efficient payroll calculation and employee management. Start your free trial today to explore how Camelo can help simplify your business processes and enhance overall productivity!

Notice: This article provides general information only and is not legal advice. Please consult with a lawyer or a legal agency if you need any further professional help for your particular situation.