Businesses in New York need to conform to both state and federal laws. Employers typically classify their workers as either hourly professionals or salaried professionals. Accurate time clock reporting is necessary regardless of the employment arrangement. However, it is especially important for ensuring the accuracy of wages for hourly employees.
Companies in New York may utilize certain workarounds to increase the efficiency of payroll processing. In some cases, companies estimate the time actually worked by rounding time clock records instead of paying workers by calculating their wages to the exact minute or second.
Does rounding time worked constitute wage theft?
Employers can estimate time worked in many cases
Neither federal statute nor New York state laws prohibit the practice of time clock rounding for payroll purposes. However, there are two key rules that govern rounding for the purposes of payroll calculations.
The first is a strict limit on the increments of time used. Employers can only round to a 15-minute increment, at the most, without potentially violating the rights of their employees.
The second restriction is the requirement to apply rounding practices consistently. Employers must be neutral about rounding up when necessary and down when appropriate. If an analysis of payroll records shows that the company routinely rounds time down but does not round time up, workers may be able to allege that the company violated their rights to fair pay by manipulating payroll records to reduce their wages.
Employers responding to wage claims and reviewing internal practices may want to consider moving to a digital timekeeping system to minimize confusion about payroll rounding practices. Reviewing a company’s current policy with a lawyer familiar with New York employment statutes can be beneficial for business leaders concerned about compliance and potential litigation as well.