Labor & Employment Developments Blog

Amazon has been hit with a FLSA lawsuit for unpaid overtime based on its practice of rounding employees’ clock-in and clock-out times to the nearest quarter hour.  As is typical, the newspaper account of the lawsuit quotes extensively from the complaint and leaves the impression that Amazon must have done something wrong.  In reality, there is nothing per se wrong with the practice or rounding hours.  FLSA regulations recognize the practice of recording employees’ starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour.  The regulations state:

Presumably, this [rounding] arrangement averages out so that the employees are fully compensated for all the time they actually work.  For enforcement purposes this practice of computing working time 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.

Thus, the issue is whether the rounding practices employed by Amazon, over a period of time, resulted in failure to compensate the employees properly for all the time they actually worked. 

When it comes to rounding, most practitioners suggest that the way to avoid trouble is to always round in favor of the employee.  My first question is why round at all?  With the technology available today, why not record exact hours and avoid the issue?