New Jersey Labor Department Changes Enforcement Policy on Rounding Employees' Time to Favor Workers

Posted: April 21, 2009

The New Jersey Department of Labor and Workforce Development (“NJDOL”) has quietly implemented a new enforcement policy, Jackson Lewis has learned, prohibiting employers from rounding hourly employees’ time evenhandedly, a practice the agency formerly allowed. The change could cost employers dearly. The NJDOL has audited several New Jersey employers recently to determine whether they are rounding employees’ time for the purpose of wage payment. State auditors issued wage payment violations under the New Jersey wage-hour law, resulting in substantial back pay liability and penalties to employers found to have engaged in this practice unlawfully. The NJDOL now has acknowledged the change in its enforcement to Jackson Lewis.

Under federal Fair Labor Standards Act regulations, rounding that results in a true give and take between the employer and the employee and does not always benefit the employer “over a period of time” is acceptable. 29 C.F.R. § 785.48. Previously, the NJDOL accepted rounding practices that complied with the federal regulations. In fact, the NJDOL had issued at least one opinion letter viewing favorably rounding practices that complied with the federal regulations.

In the past, therefore, the following rounding practices were deemed acceptable in New Jersey:

Employee punches in anytime between 8:53 a.m. and 9:00 a.m. (up to seven minutes before the start of the shift) – employee will be paid from 9:00 a.m.
Employee punches out anytime between 5:00 p.m. and 5:07 p.m. (up to seven minutes after the end of the shift) – employee will be paid through 5:00 p.m.
Employee punches in anytime between 8:45 a.m. and 8:52 a.m. (at least eight minutes before the start of the shift) – employee will be paid from 8:45 a.m.
Employee punches out anytime between 5:08 p.m. and 5:15 p.m. (at least eight minutes after the end of the shift) – employee will be paid through 5:15 p.m.
Employee punches in anytime between 9:00 a.m. and 9:07 a.m. (up to seven minutes past the start of the shift) – employee will be paid from 9:00 a.m.
Employee punches out anytime between 4:53 p.m. and 5:00 p.m. (up to seven minutes before the end of the shift) – employee will be paid through 5:00 p.m.
Employee punches in anytime between 9:08 a.m. and 9:15 a.m. (at least eight minutes past the start of the shift) – employee will be paid from 9:15 a.m.
Employee punches out anytime between 4:45 p.m. and 4.52 p.m. (at least eight minutes before the end of the shift) – employee will be paid through 4:45 p.m.

Contrary to its written opinion, the NJDOL confirmed the “new” enforcement policy in a letter to our firm which stated, “we now have an enforcement policy that requires employers who round off time worked in any increment to round it off in favor of the employee.” In support of the “new” enforcement policy, the NJDOL said that advancements in technology make it possible for employers to track and pay for actual time worked to the minute.

The NJDOL’s enforcement policy makes rounding forward when clocking in and backward when clocking out impermissible. If you currently round time in this fashion, you risk being liable for substantial back pay and penalties should your establishment be audited.

Jackson Lewis attorneys are available to answer your questions about the NJDOL’s new enforcement policy on rounding practices and can assist in developing a strategy to ensure compliance with New Jersey wage and hour laws.