New
Jersey employers employing non-exempt workers who are paid on an
hourly basis often round the workers’ shift starting and
stopping times to the nearest five minutes, ten minutes, or fifteen
minutes. In
a recent change in position, the Division of Wage and Hour Compliance
at the New Jersey Department of Labor and Workforce Development
(“Division”)
has announced that all rounding of an employee’s starting
and stopping times must be in favor of the employee.
Formerly,
New Jersey law in this area followed the federal standard under
the U.S. Department of Labor’s regulations interpreting
the Fair Labor Standards Act (“FLSA”), which permitted
employers to round off an employee’s time in either direction “provided
that [the rounding system] is used in such a manner that it will
not result, over a period of time, in failure to compensate the
employees properly for all the time they have actually worked.” The
rationale behind this provision is that over time, the rounding
practices would even out and the employee would be paid for the
actual time worked.
Without
formally updating the law, the Division recently announced that
it does not accept the U.S. Department of Labor’s “rounding
policy” under the FLSA. The Division mandated that
if an employer does round off to an increment or a fraction of
an hour, the rounding must be to the benefit of the
employee. The
Division justifies its new policy by citing advancements in timekeeping
technology that have made it possible for employers to record the precise
amount of time that each employee works. Although the Division
has not formally issued new regulations on this subject, it has
reported its revised stance to New Jersey employers.
In
light of this new development, New Jersey employers that round
off an employee’s starting time such that the employee is
deemed to start later than he or she actually arrived for work
or leave earlier than when he or she actually left work may be
subject to an audit and potential backpay penalties. To
completely avoid potential liability for such rounding practices,
New Jersey employers should cease any practice of rounding altogether
where possible. If an employer
does not have the technology to record an employee’s precise
time worked, then the employer should dispense with any rounding
policy that would reflect less time on any given day than the employee
actually worked.
Source: Larry Besnoff, Esquire, Obermayer
Please
contact Fern
Powers,
PHR, 215-563-5520, to ensure that all your employees are
identified exempt or non-exempt, by federal compliance standards,
including up-to-date compliant job descriptions and to set
up a process to comply with the new las of New Jersey. Larry
Besnoff would oversee the legal process that needs to be
followed to ensure compliance.
