Reference
Time clock rounding rules
How rounding worked time is allowed to work under federal law, what the 7-minute rule actually is, and why rounding is fading in California. Reviewed 2026-07-07. This is information, not legal advice.
Federal law lets an employer round punches to the nearest quarter hour, but only if the rounding stays neutral over time. Rounding that consistently favors the employer is not allowed, even when each individual rounding follows the quarter-hour method. Several states, California most clearly, are moving away from rounding altogether when exact time can be recorded.
The federal rule: 29 CFR 785.48
The rule for time clocks is in the Code of Federal Regulations at 29 CFR 785.48(b). It permits an employer to record starting and stopping time to the nearest 5 minutes, tenth of an hour, or quarter hour, on the assumption that the additions and subtractions average out so that workers are fully paid for all the time they actually work. The Department of Labor's Fact Sheet #22 restates the same idea in plain terms.
The load-bearing phrase is that it must average out. Rounding is a convenience the law tolerates because, done neutrally, nobody loses pay across a pay period. The moment it stops being neutral, it stops being allowed.
The 7-minute rule
The 7-minute rule is quarter-hour rounding, described the way workers usually meet it. Each punch goes to the nearest 15-minute mark. A punch 7 minutes or less past a quarter rounds back to that quarter; a punch 8 minutes or more past it rounds forward to the next one. The dividing line is 7.5 minutes. You can watch it on the 7-minute rule calculator, where a punch at 9:07 rounds to 9:00 and a punch at 9:08 rounds to 9:15.
Because each punch can move up to 7 minutes either way, a single day can round slightly for or against a worker. The neutrality requirement is about the pattern over time, not any one day.
Where neutral rounding fails
Rounding fails the federal standard when it is built to favor the employer: always rounding the clock-in forward and the clock-out back, for example, or only rounding in the direction that reduces paid time. Courts have found against employers whose rounding, over time, systematically shorted workers, even where the mechanism looked like ordinary quarter-hour rounding.
California and Camp v. Home Depot
California has moved further than the federal rule. After the state Supreme Court's 2018 decision in Troester v. Starbucks narrowed the treatment of small amounts of unpaid time, the Court of Appeal in Camp v. Home Depot held that where an employer can and does capture exact worked time, it should pay that exact time rather than a rounded figure. The Camp case reached the California Supreme Court, and employment-law firms and HR bodies now widely advise California employers to stop rounding when they have exact records.
The practical read for California, as reviewed on 2026-07-07, is that rounding is effectively unavailable for employers who can record exact time, which today is almost all of them. Because this area is still moving, check the current status before relying on it. Nothing here is legal advice.
What this means in practice
- Rounding to the quarter hour is legal federally when neutral over time, under 29 CFR 785.48.
- An employer does not have to round, and many now pay exact recorded time.
- In California, paying exact time is the safe course where exact time is captured.
- To see how a rounding policy would affect a shift, use the rounding calculator.
Sources
- 29 CFR 785.48, Use of time clocks, Code of Federal Regulations (the federal rounding rule).
- U.S. Department of Labor, Fact Sheet #22, Hours Worked under the Fair Labor Standards Act.
- Camp v. Home Depot U.S.A., Inc., California Court of Appeal (2022), review by the California Supreme Court; Troester v. Starbucks Corp., California Supreme Court (2018). Trend summarized from employment-law and HR commentary (for example SHRM and The National Law Review).
- Reviewed 2026-07-07. Legal context, not legal advice.
Common questions
Is time clock rounding legal under federal law?
Yes, within limits. The federal regulation 29 CFR 785.48(b) allows an employer to round worked time to the nearest quarter hour, as long as the rounding is neutral over time and does not consistently work against the employee. That is the source of the 7-minute rule.
What does neutral rounding mean?
It means the rounding cannot systematically undercount hours. If it rounds for and against the worker roughly evenly over time, it is neutral. If it is always set to the employer's benefit, it fails the standard even if each single rounding follows the quarter-hour method.
Why are California employers dropping rounding?
California courts have moved against rounding where an employer can capture exact time. In Camp v. Home Depot the question reached the California Supreme Court, and employment-law and HR sources now widely advise California employers to pay actual recorded time rather than rounded time. This is a summary of the trend, not legal advice.
Does my employer have to round?
No. Rounding is a convenience an employer may use, not a requirement. Many employers pay exact recorded time, especially now that digital time clocks capture it to the minute. If you think rounding is being used against you, the neutrality requirement and your state's rules are where to look.