Time clock warning: Rounding must generally favor your employees.

Fair Labor Standards Act regulations say that employees must be paid for all time worked, but it does still give you room to round. The rules say time may be kept (and pay computed) based on rounding "to the nearest five minutes, or to the nearest one-tenth or quarter of an hour."

Key point: The timekeeping system must be neutral, permitting both upward and downward rounding. That means, on average, no employee loses pay and that, overall, the system is neutral or it favors the employee.

Recent case: Emilio and Jacquelyn sued a California health care company, alleging they weren't paid for all the time they worked. Both were hourly employees who had to clock in at the beginning of their shifts and out at the end.

The time clock rounded hours up or down to the nearest 15 minutes. For example, if an employee clocked in between 6:53 and 7:07, he was paid as if he clocked in...

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