FLSA2019-9 — Permissible rounding practices for calculating an employee's hours worked

U.S. Department of Labor Wage and Hour Division
Washington, DC 20210

1

FLSA2019-9
July 1, 2019
Dear Name*:
This letter responds to your request for an opinion concerning whether a certain organization’s
rounding practices are permissible under the Service Contract Act (SCA), which uses principles
applied under the Fair Labor Standards Act (FLSA) to determine hours worked. This opinion is
based exclusively on the facts you have presented. You represent that you do not seek this
opinion for any party that the Wage and Hour Division (WHD) is currently investigating or for
use in any litigation that commenced prior to your request.
BACKGROUND
You inquire on behalf of a non-profit organization that employs individuals with disabilities
under government contracts that are subject to the SCA.
1
This organization uses payroll
software to calculate wages based on recorded time entries. You represent that the
organization’s payroll software rounds each employee’s daily hours worked in a neutral manner.
Specifically, employees generally clock in and out for each work period using a time clock or
computer and the payroll software converts the amount of time an employee records working in
each work period into a numerical figure in decimal form extended out to six decimal points
(e.g., 7 hours and 30 minutes converts to 7.500000 hours).
2
The payroll software then totals the
converted hours (extended to six decimal points) for each work period on each working day to
calculate a numerical figure for daily hours, which is also extended out to six decimal points.
Next, the software rounds that number to two decimal points—if the third decimal is less than
.005, the second decimal stays the same (e.g., 6.784999 hours worked rounds down to 6.78
hours); but if the third decimal is .005 or greater, the second decimal rounds up by 0.01 (e.g.,
6.865000 hours worked in a work day rounds up to 6.87 hours).
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Finally, the software calculates
daily pay by multiplying the rounded daily hours number by the SCA prevailing wage.

1
You represent that the organization does not pay any employee a subminimum wage rate under FLSA
section 14(c), 29 U.S.C. § 214(c).
2
You represent that a work period is the time between a clock-in and clock-out during a work day, and
that usually one work period precedes a break of at least 30 minutes and one work period follows the
break.
3
According to your letter, the software rounds an employee’s daily hours downward by no more than
0.29994 minutes per day, and rounds an employee’s daily hours upward by as much as 0.3 minutes per
day.

2
GENERAL LEGAL PRINCIPLES
The SCA generally requires government contractors to satisfy certain minimum compensation
standards for employees under covered contracts. See 41 U.S.C. § 6701 et seq. SCA regulations
provide that contractors should calculate hours worked by using FLSA principles set forth in part
785 of the regulations. See 29 C.F.R. § 4.178; see also 29 C.F.R. Part 785. Section 785.48(b)
acknowledges that it is common and acceptable for e mployers to round time in determining an
employee’s hours worked provided that doing so “ will not result, over a period of time, in failure
to compensate the employees properly for all the time they have actually worked.” 29 C.F.R.
§ 785.48(b). It has been our policy to accept rounding to the nearest five minutes, one-tenth of
an hour, one-quarter of an hour, or one-half hour as long as the rounding averages out so that the
employees are compensated for all the time they actually work. See id.; WHD Opinion Letter,
1994 WL 1004879 (Nov. 7, 1994); see also Corbin v. Time Warner Entm’t-Advance/Newhouse
P’ship, 821 F.3d 1069, 1077-79 (9th Cir. 2016) (upholding a policy of rounding to the nearest
quarter hour, which was “neutral on its face and as applied” to the plaintiff-employee over
several pay periods).
OPINION
Based on the facts you provided, this particular organization’s method of calculating hours
worked complies with FLSA regulations and is therefore compliant under the SCA.
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Its rounding practice is neutral on its face. The practice also appears to average out so that it
fully pays its employees for all of the time that they actually work. Accordingly, the
organization’s rounding practice “will not result, over a period of time, in failure to compensate
the employees properly for all the time they have actually worked.” 29 C.F.R. § 785.48(b).
We trust that this letter is responsive to your inquiry.
Sincerely,

Cheryl M. Stanton
Administrator
*Note: The actual name(s) was removed to protect privacy in accordance with 5 U.S.C.
§ 552(b)(7).

4
As noted above, the SCA uses FLSA principles to determine an SCA employee’s hours worked. See
29 C.F.R. § 4.178. As such, the FLSA’s rounding rule in 29 C.F.R. § 785.48(b) applies to the SCA.