Time clock rounding rules
Federal rules allow you to round clock punches to the nearest 5 minutes, tenth of an hour or quarter hour, provided that over time the practice does not fail to pay employees for all the time they actually worked (29 CFR 785.48(b)). Early or late punches may be disregarded only if the employee did no work during that time (29 CFR 785.48(a)).
What the regulation says
- Increments allowed: starting and stopping times recorded "to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour" (785.48(b)).
- Condition: the practice is accepted for enforcement only if it does not result, over a period of time, in failure to pay employees for all time actually worked (785.48(b)).
- Early and late punches: employees who voluntarily come in early or stay late do not have to be paid for that time if they do no work, and those punches may be disregarded (785.48(a)).
- Time clocks: not required (785.48(a)).
Rounding math by increment
"Nearest" means rounding both ways. This table is the arithmetic of that word, not separate regulatory text.
| Increment | Rounds down | Rounds up |
|---|---|---|
| 5 minutes | 1–2 minutes past a mark | 3–4 minutes past a mark |
| 6 minutes (0.1 hour) | 1–2 minutes past a mark | 4–5 minutes past a mark (3 is the midpoint; pick one direction and apply it to every punch) |
| 15 minutes (0.25 hour) | 1–7 minutes past a mark | 8–14 minutes past a mark |
Example: neutral quarter-hour rounding for one week
| Day | Actual in → rounded | Actual out → rounded | Net minutes to employee |
|---|---|---|---|
| Mon | 8:56 → 9:00 (−4) | 5:04 → 5:00 (−4) | −8 |
| Tue | 9:06 → 9:00 (+6) | 4:53 → 5:00 (+7) | +13 |
| Wed | 8:52 → 8:45 (+7) | 5:09 → 5:15 (+6) | +13 |
| Thu | 8:58 → 9:00 (−2) | 5:02 → 5:00 (−2) | −4 |
| Fri | 8:55 → 9:00 (−5) | 5:06 → 5:00 (−6) | −11 |
| Week | +3 | ||
Both directions show up, and the week nets out close to zero. Track the net per employee across several weeks to show it averages out.
Example: one-way rounding
A policy that always rounds the in-punch up and the out-punch down cannot average out. If it removes 8 minutes a day, that is 8 × 5 = 40 minutes a week. At $16.00 an hour: 40 ÷ 60 × $16.00 = $10.67 a week, or 40 ÷ 60 × $16.00 × 52 = $554.67 a year for one employee. That is the "failure to compensate" 785.48(b) describes.
When early punches must be paid
If an employee clocks in at 8:45 and starts setting up the register, that time is work. Work not requested but "suffered or permitted" is work time (29 CFR 785.11), and a rule against it is not enough: management must enforce the rule (29 CFR 785.13). Either pay for the time or stop the early work; do not round it away.
Rounding and overtime
Rounded minutes feed the weekly total. If rounding pushes the week from 40.0 to 40.25 hours, the extra 0.25 hour is overtime at 1.5× the regular rate (calculating overtime).
Records to keep
- Time cards with daily start and stop times: at least 2 years (29 CFR 516.6).
- Payroll records: at least 3 years (DOL Fact Sheet #21).
Keep the actual punch alongside the rounded figure so you can show the net effect if asked.
State rules
State-specific rounding rules: NOT FOUND in the DOL pages used for this article. Check your state labor department before adopting a rounding policy. Related: buddy punching and tracking hours without payroll software.
This is general information, not legal advice. Check your state labor department for current rules.
This is general information, not legal advice. Check your state labor department for current rules.
Questions
Is rounding employee time legal?
Under federal rules, yes, to the nearest 5 minutes, tenth of an hour or quarter hour, if it does not underpay employees over time (29 CFR 785.48(b)).
What is the 7-minute rule?
It is the arithmetic of rounding to the nearest quarter hour: 1–7 minutes past a mark round down and 8–14 round up. The regulation itself names the quarter hour, not 7 minutes.
Can I always round down?
A policy that only rounds in the employer's favor does not average out, and 785.48(b) accepts rounding only if it does not underpay employees over time.
Do I have to pay employees who clock in early?
Not if they do no work; 785.48(a) lets you disregard those punches. If they work, the time is hours worked (29 CFR 785.11).
Sources
- eCFR 29 CFR 785.48 Use of time clocks (checked 2026-11-12)
- eCFR 29 CFR 785.11 Work suffered or permitted (checked 2026-11-12)
- eCFR 29 CFR 785.13 Duty of management (checked 2026-11-12)
- eCFR 29 CFR 516.6 Records to be preserved 2 years (checked 2026-11-12)
- US DOL WHD Fact Sheet #21: Recordkeeping Requirements under the FLSA (revised July 2008) (checked 2026-11-12)