Federal time-clock rounding rules
Federal rules accept rounding punches to the nearest 5 minutes, tenth or quarter hour, only if it averages out over time. The well-known '7-minute rule' is a way of rounding to the nearest quarter hour; the regulation itself does not mention 7 minutes.
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Rounding must not shortchange over time
3 accepted increments: nearest 5 minutes, nearest tenth of an hour (6 minutes), nearest quarter hour (15 minutes). Accepted only if, over a period of time, employees are paid for all time actually worked. Rounding that only ever goes the employer's way does not meet that test.
Example. Punch-in 8:53 rounds to 9:00 (7 minutes lost to the employee). Punch-in 9:06 rounds to 9:00 (6 minutes gained by the employee). A fair policy rounds both ways by the same rule.
The '7-minute rule' is quarter-hour arithmetic
Nearest quarter hour means: 1–7 minutes past the quarter round down; 8–14 minutes round up. That midpoint is where the '7-minute rule' comes from. The number 7 does not appear in 29 CFR 785.48(b).
Example. Out at 5:07 rounds to 5:00. Out at 5:08 rounds to 5:15.
The 7/8 split is arithmetic for nearest-quarter-hour rounding; it is not separate regulatory text.
Early and late punches without work
Employees who come in early or stay late voluntarily, and do no work, do not have to be paid for that time. Those punches may be disregarded. Major gaps between clock records and hours worked should be discouraged.
Example. Punch-in 8:40, shift starts 9:00, employee has coffee and does no work: 8:40–9:00 may be disregarded. If the employee starts working at 8:40, it counts.
Questions
Is rounding legal under federal law?
The regulation says rounding to the nearest 5 minutes, tenth or quarter hour will be accepted if it does not, over time, result in failure to pay for all time actually worked.
Where does the 7-minute rule come from?
From rounding to the nearest quarter hour: 7 minutes or less rounds down, 8 or more rounds up. The regulation does not state a 7-minute rule by name.
Can a rounding policy only round down?
A policy that only rounds in the employer's favor will not average out, which is the condition 29 CFR 785.48(b) sets.
Do state rules on rounding differ?
State rules can add limits. Check the state page before relying on rounding.
This page explains published rules. It is not legal advice. Exemption questions need a professional. Not affiliated with the U.S. Department of Labor or any state agency.