Time Clock Rounding Rules: The 7 Minute Rule, 5, 6 and 15 Minutes

Under federal law, an employer may round clock in and clock out times to the nearest 5 minutes, the nearest tenth of an hour (6 minutes) or the nearest quarter hour (15 minutes), as long as the rounding averages out over time so employees are paid for all the time they actually work. The 7 minute rule is simply what rounding to the nearest quarter hour does to whole minutes: 1 to 7 minutes past a quarter round down, 8 to 14 minutes round up.

That is the whole federal rule, and it is one paragraph long. Below is the text itself, what each rounding step does minute by minute, a week rounded three ways, and a pattern that does not average out.

The federal rule: 29 CFR 785.48(b)

The rule sits in the Department of Labor's regulations on hours worked, in a section called "Use of time clocks". 29 CFR 785.48(b) says that in some industries there has long been a practice of "recording the employees' starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour". It then gives the reason that practice is tolerated: "Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work."

And the condition: the practice "will be accepted, provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked."

Read closely, that gives three points:

1. Three steps are named: 5 minutes, a tenth of an hour, a quarter of an hour. Nothing longer.
2. The word is "nearest". Times move to the closest step, up or down. The text describes rounding both ways, not rounding that only ever goes in one direction.
3. The test is the result over time. A single day can go either way. What counts is that, across many days and weeks, employees are not paid for less time than they worked.

Rounding changes the clock times, not the rate of pay, and overtime is still counted on the hours that come out of it: time and a half for hours over 40 in each workweek (29 U.S.C. § 207(a)(1)), with each workweek standing alone (29 CFR 778.104).

States can have rules of their own on rounding, so check your state's labor department before you rely on the federal text alone.

This is a calculation, not legal advice.

The 7 minute rule is quarter hour rounding

The "7 minute rule" is not a separate law and does not appear in the regulation. It is the arithmetic of rounding to the nearest 15 minutes. The midpoint between two quarter hours is 7.5 minutes. Clock punches are recorded in whole minutes, so nothing lands exactly on the midpoint: 7 minutes is below it and rounds down, 8 minutes is above it and rounds up.

The same applies to clock out. Leaving at 5:07 PM is recorded as 5:00 PM; leaving at 5:08 PM as 5:15 PM. The largest change on a single punch is 7 minutes either way.

6 minute rounding: tenths of an hour

A tenth of an hour is 6 minutes, so the hour splits into 10 steps: :00, :06, :12 and so on up to :54. This step is popular with payroll because every rounded time is an exact decimal: 6 minutes is 0.1 hours, 36 minutes is 0.6.

The midpoint of a 6 minute step is 3 minutes, a whole minute, so here a punch can land exactly halfway: 9:03 is as close to 9:00 as to 9:06. The regulation does not say which way a tie goes. The calculator rounds ties up, in the employee's favor on a clock out and against it on a clock in, so 9:03 becomes 9:06 either way. If your employer's system handles ties differently, a day can differ by 6 minutes.

5 minute rounding

The hour splits into 12 steps of 5 minutes. The midpoint is 2.5 minutes, so whole minutes never tie: 0 to 2 minutes past a step round down, 3 and 4 round up. 9:02 becomes 9:00, 9:03 becomes 9:05. The largest change on a punch is 2 minutes.

A week rounded three ways

An employee with a 30 minute unpaid lunch every day. The exact punches, then the hours after rounding In and Out:

Wednesday under quarter hour rounding: In 8:52 becomes 8:45 (8 minutes before 9:00 rounds back), Out 4:58 becomes 5:00, so 8:15 at work minus 0:30 is 7:45, nine minutes more than the exact 7:36. Thursday goes the other way: 9:08 becomes 9:15 and the day loses 4 minutes.

Over this week, quarter hour rounding added 19 minutes, tenth of an hour rounding 7 and 5 minute rounding 4. Another week with different punches can come out below the exact total. That back and forth is what "averages out" means in the regulation: single days and single weeks move, but across many of them the rounded hours and the worked hours should come out close.

A pattern that does not average out

Rounding only averages out when punches fall randomly around the step. When they cluster on one side, the result leans one way every day. Take an employee whose shift is 9:00 AM to 5:00 PM and who, out of habit, clocks in a few minutes early and out a few minutes late, with quarter hour rounding:

Every punch here is within 7 minutes of the hour, so every punch rounds to 9:00 or 5:00. If the employee was working during those minutes, the rounding drops 58 minutes of work a week. At $20 an hour that is $19.33 a week; over 50 working weeks, 2,900 minutes, or 48 hours 20 minutes, worth $966.67. Nothing ever comes back the other way, which is exactly the result 785.48(b) says the practice must not have over a period of time.

The same week near 40 hours shows the second effect. Rounding that removes time can also move hours from above 40 to below it, and then the lost minutes would have been paid at time and a half.

How to check whether rounding evens out

You do not need special software, only the exact punches next to the rounded ones:

1. Keep the exact times. Rounded times alone cannot show what was lost or gained.
2. Compare totals over several pay periods, not one day. Add the exact hours and the rounded hours for each person and look at the difference.
3. Look for a sign that never changes. A difference that is sometimes plus and sometimes minus is what averaging looks like. One that is minus week after week is the pattern above.
4. Check the overtime weeks separately, because a minute lost there is worth 1.5 times as much.

To compare a week yourself, enter the exact punches in the time card below with "Round clock times" set to "No rounding", note the total, then switch to "To the nearest 15 minutes" (or 5 or 6) and compare.

Rounding in the calculator

The time card has "Round clock times" under "Overtime, breaks and pay". The options are "No rounding" (the default) and "To the nearest 5 minutes", "To the nearest 6 minutes" and "To the nearest 15 minutes". It rounds each In and each Out time to the nearest step before the day is calculated, rounds an exact tie up (the 6 minute case above), and leaves the unpaid break as you typed it. Overtime and pay are then calculated from the rounded hours, week by week. There is no "always round down" or "always round up" option.