Finance News & Insights

How much can improper rounding cost? For this firm, nearly $300K

If your company subscribes to the pay practice of rounding nonexempt employees’ hours to a set time, you’re certainly not alone.
After all, if employees’ hours eventually even out over time, what’s there to worry about?

Answer: The scrutiny of the DOL.

Why the DOL is investigating

During a recent presentation at the 2017 SHRM Conference in New Orleans, attorney and former administrator of the DOL’s Wage-and-Hour Division, Tammy McCutchen, warned employers that the DOL has decided to put the practice of rounding hours under the microscope.

Why? In most cases, the DOL claims rounding actually winds up hurting employees.

It also doesn’t hurt that it’s easy an easy target for DOL investigators to spot during their reviews.

Scheduled vs. actual hours

Here’s a really life example to show just how costly this issue can be for employers who end up on the wrong side of a DOL investigation.

The DOL investigated Quik Park, a company that operates 138 parking garages in the New York City area, and uncovered a number of FLSA and overtime violations that stemmed from its rounding practices.

According to the agency, the company rounded its employees’ hours and programmed its timekeeping system to automatically record their scheduled work hours instead of the actual hours worked they put in.

That proved costly, and Quick Park wound up paying $296,836 in back wages to affected employees.

Be ready to back it up

Employers that don’t want to give up rounding need to be prepared to prove the rounding doesn’t have an overall negative effect on employees.

Key: The FLSA allows staffers’ time to be rounded to the nearest quarter hour. Time from 1 to 7 minutes may be rounded down, and time from 8 to 14 minutes must be rounded up

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