The 7-minute rule is a way of rounding employee time to the nearest quarter hour. One to seven minutes round down, and eight to fourteen minutes round up. US federal rules accept this only if the rounding evens out over time, so that employees are paid for all the time they work. Rounding that always favors the employer is a violation.
Key takeaways
- 1 to 7 minutes round down. 8 to 14 minutes round up.
- The rounding must work in both directions.
- Always rounding down, or rounding only in the employer's favor, breaks the rule.
- If your software records exact minutes, you can skip rounding altogether.
How does the 7-minute rule work?
| Actual punch | Rounded time | Why |
|---|---|---|
| 8:07 | 8:00 | 7 minutes past, rounds down |
| 8:08 | 8:15 | 8 minutes past, rounds up |
| 4:52 | 4:45 | 7 minutes past 4:45, rounds down |
| 4:53 | 5:00 | 8 minutes past 4:45, rounds up |
Where does the rule come from?
From a federal regulation, 29 CFR 785.48(b). It recognizes the practice of recording starting and stopping times to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. The practice is accepted on one condition: it must average out so that employees are fully compensated for all the time they actually work.
The Department of Labor spells out the quarter-hour version in Fact Sheet 53. Employee time from 1 to 7 minutes may be rounded down, and time from 8 to 14 minutes must be rounded up and counted as a quarter hour of work.
Which rounding increments are allowed?
Nearest 5 minutes
1 and 2 minutes round down. 3 and 4 minutes round up.
Smallest swingNearest tenth of an hour
Six-minute blocks, common in billing.
Matches decimal hoursNearest quarter hour
The 7-minute rule.
Largest swing
The bigger the increment, the more a single punch can move, and the more it matters that the rounding is neutral.
When does rounding break the law?
When it stops evening out. The Department of Labor says a violation may occur if the employer always rounds down. Its examples include:
- Rounding to the schedule. An employer rounded early clock-ins and late clock-outs back to the scheduled times. The lost time added up to 1.25 hours that was owed as overtime.
- Counting only full quarter hours. An employee always clocked out 12 minutes late, and the employer paid only for complete 15-minute blocks. That violates the overtime rules.
Neutral rounding
- Round every punch to the nearest increment
- Apply the same rule to arrivals and departures
- Apply the same rule to every employee
- Check now and then that totals even out
One-way rounding
- Round late arrivals up and early arrivals away
- Round every clock-out down
- Pay only for complete blocks
- Round in the employer's favor for some groups only
Does rounding really even out?
It should, and you can test it. Here is one week with each day's total rounded to the nearest quarter hour.
| Day | Actual time | Rounded time | Difference |
|---|---|---|---|
| Monday | 8h 04m | 8h 00m | 4 minutes less |
| Tuesday | 8h 09m | 8h 15m | 6 minutes more |
| Wednesday | 7h 52m | 7h 45m | 7 minutes less |
| Thursday | 8h 11m | 8h 15m | 4 minutes more |
| Friday | 7h 58m | 8h 00m | 2 minutes more |
| Week | 40h 14m | 40h 15m | 1 minute more |
That is what neutral looks like. If your own records show the rounded total below the actual total week after week, the rounding is not neutral and the difference is unpaid time.
Does rounding affect overtime?
Yes. Overtime is owed on hours actually worked over 40 in a workweek, and rounding may not shave it. In the week above, 14 minutes of overtime were worked. Rounding paid 15. If one-way rounding had turned 40h 14m into 40h 00m, those 14 minutes would be owed. See how to calculate overtime.
Should you still round time?
Rounding dates from punch cards and payroll done by hand. Software now records exact minutes at no extra cost.
Pay exact minutes
Simplest to explain and hardest to dispute.
RecommendedNeutral rounding
Allowed under federal rules if it evens out. Needs checking.
AcceptableOne-way rounding
Favors the employer by design.
Not allowed
To turn minutes into the decimal hours payroll needs, see the minutes to decimal hours chart.
How does BirdsEye record time?
BirdsEye records working time in one-minute blocks, so there is nothing to round at the source. Time entries export as CSV for payroll, with the actual minutes. BirdsEye does not run payroll. If your payroll system applies rounding, the exact record is there to check it against. See time tracking.
Frequently asked questions
Is the 7-minute rule legal?
Under federal rules, yes, if it is applied neutrally so that rounding up and rounding down even out and employees are paid for all time worked. Some states are stricter.
Can my employer always round my time down?
No. The Department of Labor says a violation may occur if the employer always rounds down.
What is the 15-minute rule?
It is another name for the same practice: rounding to the nearest quarter hour, with the dividing line at seven and a half minutes.
Do employers have to round time?
No. Rounding is optional. An employer can pay for the exact minutes recorded, which is simpler and easier to defend.