The 7-Minute Rule and Time Clock Rounding

29 CFR 785.48(b) recognizes that some employers record starting and stopping times to the nearest 5 minutes, one-tenth of an hour or one-quarter of an hour. The regulation accepts the practice on one condition: it must not, over a period of time, result in failure to compensate employees properly for all the time they have actually worked. Rounding is permitted only when it averages out, which requires that it round both up and down.

Paragraph (a) of the same section covers a related situation: an employee who voluntarily clocks in early or out late but does not work during that extra time need not be paid for it.

The 7-minute rule is not written in the regulation. It is the arithmetic consequence of rounding to the nearest quarter hour: the midpoint between two quarter hours is 7.5 minutes, so punches up to 7 minutes past a quarter hour round down and punches 8 minutes or more past round up.

Examples: 8:07 AM rounds to 8:00; 8:08 AM rounds to 8:15; 5:07 PM rounds to 5:00 and 5:08 PM to 5:15. Rounding a start time down favors the employee; rounding an end time down favors the employer. Over many punches the two should balance.

A rounded day

Punches 7:56 AM in, 12:03 PM out, 12:34 PM in, 5:09 PM out. Exact: 4:07 + 4:35 = 8 hours 42 minutes. Rounded: 8:00 to 12:00 plus 12:30 to 5:15 = 8 hours 45 minutes, 3 minutes in the employee's favor; another day may go the other way.

Rounding to one-tenth of an hour uses 6-minute steps, which convert to clean decimals (0.1, 0.2 and so on). The midpoint is 3 minutes, so minutes 0 to 2 past a step round down and 3 to 5 round up.

Rounding to the nearest 5 minutes works the same way with a 2.5-minute midpoint: 8:02 rounds to 8:00 and 8:03 to 8:05. The smaller the increment, the smaller the possible loss or gain on any single punch.

California applies its own wage law alongside the FLSA, and its courts have narrowed rounding. In Donohue v. AMN Services (2021) the California Supreme Court held that employers may not round meal period punches: a 28-minute lunch is a short meal period that triggers premium pay under Labor Code 226.7, even if rounding would have recorded 30 minutes.

The broader question of whether neutral rounding of regular punches remains lawful in California was raised in Camp v. Home Depot, decided by the Court of Appeal in 2022; the California Supreme Court granted review (S277518), and the outcome of that review should be checked before relying on rounding in the state. Until the matter is settled, the prudent course for California employers is not to round at all and to pay for every minute recorded. Modern time systems capture exact minutes, which removes the original justification for rounding.

• One-directional rounding. Always rounding start times up and end times down fails the neutrality test in 29 CFR 785.48(b).
• Rounding combined with scheduling. If employees regularly start work at 7:55 and every punch rounds to 8:00, 5 minutes of actual work disappear from each day.
• Grace periods that are really work. Paragraph (a) covers idle time before a shift, not time spent setting up or logging in.
• Rounding meal punches. Barred in California after Donohue; elsewhere it can turn a 30-minute meal period into a shorter, compensable one.
• No periodic audit. Neutrality is a question of fact over time; an employer that rounds should compare rounded and exact totals at intervals.

Employees who suspect rounding is costing them time can keep a record of exact punches and compare it with the pay stub using the time card calculator, which works to the minute.