What is the 7-minute rule?
Also known as ‘time clock rounding’, the 7-minute rule in payroll was enforced by the Fair Labour Standards Act and applies to track and calculating employees’ hours, overtime and pay.
The law states that employees are to be paid for every hour they work as well as calculating incomplete hours.
Rather than micromanaging time, it involves rounding up to the closest increment of time.
For example, every 15 or 30 minutes, or by quarters and halves.
The ‘7-minute rule’ comes into play for employers that find themselves having to calculate uneven periods of time and explicitly states companies should ‘round up’ whenever possible.
A practical example
A company pays its employees in 10-minute increments throughout the day and two workers punch out; one leaves 42 minutes into their final hour, and the other 48 minutes into theirs.
The rule states that the first employee can legally be rounded down to 40 minutes for payroll purposes, but the other must be rounded up to 50 minutes.
Over time it is estimated to balance out, and allows a detailed record to be kept while employees are accurately compensated.
To give a specific case of the ‘7-minute rule’ in action, a company that charges in 15-minute increments has an employee that clocks out in the seventh minute of their final shift.
If they work for the full seven minutes the company can round down. Anything above that is rounded up to the nearest increment.
What problems can it cause?
Logistically, tracking the specifics of this process can be extremely difficult and time consuming.
Using a digital solution permits you to automate the process when it comes to producing a pay cheque.
Doing so allows your team to save significant time and effort in validating and confirming the hours worked, especially in high-volume environments.
Choosing a reliable timesheet software platform enables you to not only generate, but track the timekeeping of your employees – giving you an ‘at a glance’ view of your overall efficiency.
It can help you quickly find and iron out wrinkles in your daily practice while ensuring errors are identified and addressed with speed.
It can also help with business growth and change management, guaranteeing you meet the highest standards of compliance.
Find out more
If you want to learn more about how software solutions can help with your payroll actions, the team at Practical Software is here to help.
With a range of modular options to suit all your working needs, we can help make sure you comply fully and calculate precisely.
You can review our list of options and functionality from here.
Or, if you have bespoke requirements or specific queries, please do not hesitate to get in touch directly and let us know exactly what you need to carry out your work with maximum efficiency and accuracy.