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Whether you work as a freelancer or are contracted in a permanent, full time capacity, there's a considerable chance you have to log your hours. From retail shift work to drawing up budgets, many employees have to factor in the time they spend working. Previously, businesses used manual punch time clocks, which have since evolved into digital time tracking software.
Regardless of what equipment you use to keep an eye on your employees' time, the question remains: What's the best time tracking process? Many organizations use time rounding, but it's recently become a point of contention. Why? What is it, exactly? And, is it an appropriate choice for you? Let's take a look:
Don't worry — you don't have to be a rocket scientist to understand time rounding. At its basis, as its name suggests, it's a way to make accounting easier. In essence, managers round hours (minutes, more specifically) up or down to the nearest whole number, as Clockify explains. It also helps to account for time that can't be logged in time sheets, such as bathroom breaks. These numbers can be used to calculate payroll without effort.
What does this look like in practice? Let's use an example. Say an employee officially clocked in at 8:58 AM and formally finished work at 4:52 PM. They would have, in theory, worked for seven hours and 54 minutes. If their employer uses time rounding, they can round the number up to the nearest five, 10, or 15 minutes. This could look like seven hours and 50 minutes or seven hours and 55 minutes, depending which route the manager takes.
The primary purpose of time rounding is so that employees don't falsify how many hours they've worked by clocking in a few minutes before they actually start working (alternatively, by clocking out a few minutes after they've stopped working, or both).
The issue comes in when employers purposefully round up clocking in numbers (which would indicate the employee started work later than they actually did) or round down clocking out hours, making it seem as if the employee finished work earlier. This would, in effect, look like the employee worked less time than they did. Some managers use this as a way to justify paying employees less for fewer hours worked, although those numbers are fudged.
To prevent unfair pay cuts, JD Supra explains that several states have passed legislation strictly regulating time rounding, most notably California. In general, it's advised not to use time rounding when accurate time tracking software can be utilized to calculate worked hours accurately.
In cases where time rounding may be necessary, you should round to the nearest five minutes to ensure the most fairness. Play it safe by rounding in favor of the employee. If you suspect that the hours are a little off for whatever reason, call in the employee to discuss what's going on rather than paying them less on the assumption that they fabricated their numbers.
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