The Definitive Guide to Time Cards: Hours, FLSA Overtime Laws & Rounding Rules
1. Calculating Shift Hours and Deducting Unpaid Breaks
Accurate timekeeping requires calculating the exact elapsed decimal duration between clock-in and clock-out timestamps while properly separating compensable working time from non-compensable rest intervals.
2. The 7-Minute Rounding Rule (DOL 15-Minute Policy)
The US Department of Labor (Code of Federal Regulations 29 CFR § 785.48) permits employers to round employee clock-in and clock-out times to the nearest quarter of an hour (15 minutes). This is commonly called the 7/8 Rule:
| Actual Minute Range | Rounded Time Direction | Example Clock-In (8:00 Base) |
|---|---|---|
| 1 to 7 Minutes After | Rounded down to previous quarter hour | 8:07 AM → 8:00 AM |
| 8 to 14 Minutes After | Rounded up to next quarter hour | 8:08 AM → 8:15 AM |
Important Legal Mandate: The rounding rule must be applied neutrally in both directions. An employer cannot round down at clock-in while rounding down at clock-out, as this would unlawfully shortchange employee wages.
3. Federal FLSA Overtime vs. State Daily Overtime Laws
Under federal FLSA regulations, overtime is assessed on a fixed 7-day, 168-hour workweek basis, irrespective of the day on which the work is performed. Working 12 hours in a single day does not trigger federal overtime if total weekly hours do not exceed 40.
However, several US states maintain strict daily overtime mandates that supersede federal guidelines:
- California: Mandates 1.5x overtime for hours worked past 8 hours in a single workday, and 2.0x double-time for hours worked past 12 hours in a single workday.
- Colorado: Requires overtime after 12 hours worked in a single workday, or consecutive shifts exceeding 12 hours.
- Alaska & Nevada: Require overtime for work beyond 8 hours in a 24-hour period for employees earning under statutory wage thresholds.
4. Converting Hours and Minutes to Payroll Decimals
Because payroll software operates in base-10 decimals, clock times expressed in minutes must be converted by dividing the minute count by 60:
5. Exempt vs. Non-Exempt Employee Classifications Under Federal FLSA
The Fair Labor Standards Act distinguishes between employees entitled to overtime protections (non-exempt) and those excluded from statutory overtime (exempt). To qualify as exempt from overtime, an employee must satisfy three concurrent statutory tests:
6. Recordkeeping Compliance: The Department of Labor 3-Year Mandate
Section 11(c) of the FLSA requires employers to preserve payroll records, collective bargaining agreements, sales and purchase records for at least three years. Furthermore, all basic time and earning cards, clock-in sheets, wage rate tables, and work schedules must be retained for at least two years.
In the event of a Department of Labor Wage and Hour Division audit or an employee misclassification dispute, the legal burden of proof falls entirely upon the employer to provide comprehensive, tamper-evident daily timecard records proving all hours worked and overtime paid.
Frequently Asked Questions
Are short rest breaks (5 to 20 minutes) paid or unpaid?
Under federal law (29 CFR § 785.18), short rest breaks lasting from 5 to 20 minutes are considered compensable working time and must be paid by the employer. Employees are not required to clock out for coffee breaks or restroom visits.
Does weekend or holiday work automatically qualify for double-time?
Under federal law, no. The FLSA does not require extra pay for weekend or holiday work unless that work pushes the employee's total hours over 40 for that workweek. However, individual employment contracts or union collective bargaining agreements often specify holiday premiums.
Can an employer average hours over two weeks to avoid overtime?
No. Overtime must be calculated on a single workweek basis. If an employee works 50 hours in Week 1 and 30 hours in Week 2 (total 80 hours in a bi-weekly pay period), the employer owes 10 hours of overtime pay for Week 1.