A lot of employees ask “Is rounding hours even legal?”, and the answer is yes. The Fair Labor Standards Act (FLSA) states that you must pay your employees for all hours worked. According to DOL, however, employers are allowed to round hours. Under the FLSA, you are allowed to round employee’s time in 15 minute increments or to the nearest quarter hour. When rounding time you just have to ensure that you are not violating FLSA regulations for minimum wage and overtime pay.
Tag: calculate payroll
For the longest time, why anyone would use rounding in payroll calculations was beyond me. Since rounding is meant to even out in the end, what could possibly be the point? I don’t like unanswered questions hanging around so I decided to do some digging. I still don’t think rounding is a brilliant idea but at least I understand why it’s used. Essentially, rounding in the morning is meant to benefit the occasional late employee while rounding in the evening can benefit the employer. I’ll explain how this works.
Have you ever run payroll and found that your cost is much higher than expected? In some industries, like dental offices, for example, payroll costs should be pretty constant. Your same five employees come to work every day and work their set shift. They take off when they’re sick or on vacation and your time-off policy compensates them for it. They don’t need to stay late or come in early most of the time – the office is open on a pretty set schedule.
Business owners are experts at running their business. But they probably are not trained in payroll and they probably haven’t studied federal and state wage and hour laws. This leaves room for quite a bit of error.
Messing up payroll is serious business. Payroll is a business’ largest expense and getting it wrong could mean facing an even larger expense. I’ll bring five of the most common payroll errors to the attention of these busy people so they don’t wind up in trouble for it later.
You can’t do business without calculations and one could argue that you can’t do business without calculators – after all, where would you get the time to run your business if you had to calculate everything by hand. Lucky for the nation’s small businesses, the internet offers tools of all kinds to help with everything from the most basic to the most complicated calculations.
Double time rules seem complicated because we hear a lot about it from many different places. Some companies offer double time for holidays, but that’s just a benefit, not a law. Some countries offer double time on Sundays, but that’s not how it works in the US. Double time rules are pretty simple actually. There are only two instances in which employees should get double time pay.
You’d almost be surprised that an employer would recognize the value in tracking accurate time (it saves a lot of money on payroll costs) and then, at the end of every pay period, estimate the hours for the last few days.
But it’s actually a fairly common practice, though not a very good one.