To help simplify recordkeeping, federal law allows employers to round the time worked by hourly employees to the nearest quarter hour.
But, as a $2.75 million settlement by uniform services provider ARAMARK illustrates, employers must ensure that rounding does not result in a failure to compensate employees properly for all the time they have actually worked.
In a complaint filed earlier this year, a group of about 3,000 ARAMARK employees alleged that the company's policy of rounding their punch-in and punch-out times to the nearest 15 minutes, combined with its strict attendance policy in which employees are disciplined for punching in more than five minutes late, resulted in employees being underpaid by 30 to 40 minutes per pay period.
A Fair Labor Standards Act (FLSA) regulation, 29 C.F.R. § 785.48, states that over a period of time, rounding should average out so that employees are fully compensated for all the time they actually work.
The complaint also alleged that ARAMARK violated several other wage and hour laws, both federal and California-specific. Among the latter were allegations that ARAMARK failed to pay employees overtime when they worked more than eight hours in a workday and to provide unpaid meal breaks and paid rest breaks.
In these areas, California's requirements are stricter than those of the FLSA. Under the FLSA, employees typically are entitled to overtime only when they work more than 40 hours in a workweek, regardless of the number of hours per day they work. Likewise, under the FLSA, employers are not obligated to provide meal or rest breaks to employees.