Is Time Clock Rounding Legal in 2026? Rules by State

Rounding punches to the nearest quarter hour is legal under federal law and has been since 1961, when the Department of Labor wrote the practice into its regulations on the theory that over time it "averages out." In 2026 that theory is under more pressure than at any point since. A Department of Labor opinion letter issued in May 2026 told a hospital with 18,000 hourly staff that its rounding was unlawful because it only ever rounded in the employer's favor, and warned employers to be "particularly careful" relying on rounding or de minimis arguments when their timekeeping systems already capture exact minutes. California's Supreme Court has had a case on its docket since February 2023 asking whether neutral rounding is permitted at all when exact time is recorded, and has still not decided it. An Oregon federal court has said Oregon does not permit rounding. Settlements in rounding cases reached $86 million this year.

This guide sets out the federal rule and what "neutral" means in practice, the state-by-state position as of November 2026, the case law and the 2026 opinion letter, what rounding has cost employers recently, a calculator that shows whether a rounding policy pays employees less than their recorded time, and the policy that survives all of it, which is increasingly not to round at all. For the minute-to-decimal conversions themselves, see the timesheet conversion chart.

Rounding calculator: does your policy pay for recorded time?

Enter a week of actual punches and choose a rounding increment. The calculator shows the rounded time, the difference from the exact time, and whether the policy has shortchanged the employee over the week, which is the test every court and agency applies. Nothing typed here leaves your browser.

The federal rule and the 7-minute rule

The Fair Labor Standards Act requires pay for all hours worked, and the Department of Labor's regulation at 29 CFR 785.48(b) carves out rounding as an enforcement accommodation rather than a right. The regulation observes that "particularly where time clocks are used, there has been the practice for many years of recording the employees' starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour," presumes that "this arrangement averages out so that the employees are fully compensated for all the time they actually work," and concludes: "For enforcement purposes this practice of computing working time will be accepted, provided that it 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 "7-minute rule" is the arithmetic of quarter-hour rounding. A punch 1 to 7 minutes past the quarter hour rounds down to it; a punch 8 to 14 minutes past rounds up to the next one. An employee who clocks in at 8:07 is paid from 8:00; one who clocks in at 8:08 is paid from 8:15. The same regulation's subsection (a) adds that time clocks are not required at all and that "minor differences between the clock records and actual hours worked cannot ordinarily be avoided," while "major discrepancies should be discouraged since they raise a doubt as to the accuracy of the records." Three things in the text matter more than the folklore around it:

• Rounding is accepted "for enforcement purposes," meaning the Department will not pursue a compliant rounding practice. It is not a safe harbor against private suits, and courts apply the regulation's proviso directly.
• The test is whether the practice fails to pay "properly for all the time they have actually worked," assessed "over a period of time." A policy that is arithmetically neutral but systematically applied to shifts that start early and end late is not neutral in effect.
• Nothing in the regulation says rounding must be allowed to employees who were actually tracked to the minute. It was written for a world in which the exact minute was hard to record. That gap is where the California litigation lives.

The related doctrine of de minimis time, 29 CFR 785.47, is narrower than employers assume. It covers "insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot as a practical matter be precisely recorded," applies only to "uncertain and indefinite periods of time involved of a few seconds or minutes duration," and states that "an employer may not arbitrarily fail to count as hours worked any part, however small, of the employee's fixed or regular working time." The regulation itself cites a case holding that ten minutes a day is not de minimis.

What neutral means, and the 2026 opinion letter

On May 28, 2026 the Wage and Hour Division issued opinion letter FLSA2026-8, its first in several months, to a public hospital system with roughly 18,000 nonexempt employees. The hospital let staff clock in up to seven minutes early, rounded early clock-ins forward to the scheduled start and clock-outs back to the scheduled end, and did not pay for pre-shift handoff reports and assignment lookups that staff did in those minutes. The Division's conclusions, as reported by the law firms that analyzed the letter:

1. Pre-shift handoff and assignment work by respiratory therapists was integral and indispensable to their jobs and therefore compensable, whatever the clock said.
2. The de minimis doctrine was unlikely to cover daily pre-shift work. Employers should be "particularly careful" invoking it given that modern timekeeping captures actual times, and administrative difficulty alone does not justify ignoring up to seven minutes a day across thousands of employees.
3. The rounding practice failed 29 CFR 785.48(b) because it was not neutral: it rounded early punches forward but did not permit early clock-outs, so it could only ever benefit the employer. A practice that credited late clock-ins with the scheduled start time, so that rounding could cut both ways and average out, would likely comply.

The letter does not ban rounding. It restates the federal position in a way that makes most real-world rounding policies look worse than their authors think, because the policies that produce complaints are almost never symmetrical. A grace period that forgives lateness but does not pay earliness, a rule that rounds the start of the shift but pays the end to the minute, a schedule-based system that assumes the scheduled shift unless a manager edits it: each is one-directional in practice, and one-directional is what the Division said is unlawful. Earlier letters, in 1994 and 2019, accepted rounding to the nearest five minutes, tenth, quarter or half hour and rounding by payroll software, in both cases on the condition that it averaged out.

California: Camp v. Home Depot and the cases around it

California follows its own wage orders rather than the federal regulation, and its courts have taken four steps away from rounding over fourteen years.

The California Supreme Court granted review of Camp on February 1, 2023 (case S277518) on the question "whether employers are permitted to use neutral time-rounding practices to calculate employees' work time for payroll purposes." Briefing was complete in September 2023. As of early November 2026 the case has not been argued or decided; an appellate tracker in September 2026 listed it as the oldest fully briefed case on the court's docket, with the court having agreed to counsel's requests not to set argument on several possible dates. While review is pending the Court of Appeal decision has persuasive rather than binding force, but trial courts have been treating its reasoning as the direction of travel, and plaintiffs plead it in every rounding case. The practical position for a California employer in 2026 is that neutral rounding is defensible under See's Candy today and may become indefensible on the day the court rules, with liability reaching back four years under the Unfair Competition Law. Most large California employers stopped rounding in 2023 for that reason.

Other states

Rounding meal punches

Rounding a meal punch is a different act from rounding a shift punch, because the meal has a legal minimum length. A 28-minute meal rounded to 30 is, under federal law, a short break that must be paid in full (29 CFR 785.19), and under California law a violation owed one hour of premium pay. Donohue barred meal-punch rounding in California in 2021, and Washington counsel report the same position from the state's Department of Labor and Industries. In every state the safer design is to record the meal to the minute and, if anything is rounded, round only the shift. Our lunch break deduction calculator covers the related automatic-deduction problem.

What rounding has cost

• $86 million: Callister v. Swedish Health Services, King County, Washington, preliminary approval May 2026, for missed second meal periods on long shifts and underpayment through rounding of time entries.
• $12.47 million: Bartlett v. Trader Joe's, California, for rounded punches, missed breaks and bonus pay omitted from overtime, covering California crew from December 2016 to March 2024; final approval hearing set for April 2027.
• $1.64 million: WellNow Urgent Care, hourly patient-care staff in New York, Illinois and Pennsylvania, meal deductions and time rounding; claims deadline November 2026.
• $750,000: Corley v. Novant Health, North Carolina, a Fair Labor Standards Act collective action over a rounding policy in place until February 2023 that reduced overtime.
• $594,143: a Department of Labor recovery in May 2025 for 59 construction workers in Michigan and Mississippi whose employer used rounding that did not capture all hours worked, plus unpaid overtime.

The amounts are driven less by the minutes than by the multiplication: a few minutes a day, times every employee, times two to six years, plus liquidated damages, plus the overtime hours that rounding pushed below 40, plus attorney fees. The Camp plaintiff's loss was about 470 minutes in four and a half years, under $200 at his wage; the case has run for six years and will set the rule for every hourly employee in California.

A rounding policy that survives, or none at all

1. Do not round. Every timekeeping system sold today records to the minute and calculates pay to the minute. Rounding saves nothing except the appearance of tidy schedules, and it is the one timekeeping practice whose legality is actively deteriorating. Employers in California, Oregon and Washington should already have stopped; employers elsewhere have no upside left.
2. If you must round, round only in the employee's favor. Round clock-ins down and clock-outs up. This is lawful in every state, satisfies Oregon's regulator and the Camp reasoning, and costs a few minutes a day.
3. If you round to nearest, make it symmetrical and prove it. The same increment and rule at both ends of the shift; no grace period that forgives lateness without paying earliness; no schedule-based defaults; a quarterly report comparing exact and rounded hours by employee, with a true-up payment to anyone whose rounded hours fell below exact hours in any pay period. The 2026 opinion letter makes a one-directional policy unlawful on its face.
4. Never round meal punches.
5. Pay for pre- and post-shift work regardless of rounding. Handoffs, boot-up, security screening that the employer controls, and closing tasks are hours worked. Rounding does not make them disappear, and de minimis will not cover anything that happens daily.
6. Keep the exact punches. If the system rounds, keep the unrounded data for the full retention period (three years federally, six in New York, see record retention by state). An employer that can show exact time was paid in full has no case to answer; one that discarded it faces the Mt. Clemens inference.

For employees: if your punches are rounded, compare a few weeks of actual punch times against your pay stubs. A pattern of losing minutes, especially minutes that would have been overtime, is a wage claim in every state and a strong one in California, Oregon and Washington. Our discrepancy template is built for exactly that comparison.

Key takeaways

• Federal law accepts rounding to the nearest 5 minutes, tenth or quarter hour under 29 CFR 785.48(b) only if the practice does not, over time, fail to pay for all hours actually worked. The 7-minute rule is quarter-hour rounding's arithmetic.
• A May 2026 Department of Labor opinion letter found a hospital's rounding unlawful because it only rounded in the employer's favor, and warned employers to be particularly careful with rounding and de minimis arguments when systems already record exact minutes.
• California's Supreme Court has had Camp v. Home Depot, which held rounding unlawful where exact time is captured, under review since February 2023 and had not decided it as of November 2026. See's Candy still permits neutral rounding in the meantime; Donohue bars rounding meal punches.
• An Oregon federal court held in 2022 that Oregon does not permit rounding; Washington courts have struck down facially neutral policies that favored the employer in effect; Connecticut expressly allows quarter-hour recording.
• Recent costs: $86 million (Swedish Health, Washington, 2026), $12.47 million (Trader Joe's, California), $750,000 (Novant Health) and a $594,143 Department of Labor recovery in 2025.
• The safest policy is not to round. If you must, round only in the employee's favor; a nearest-rounding policy needs symmetry at both ends of the shift, no one-way grace periods, and periodic true-ups.
• Never round meal punches, pay for pre- and post-shift work regardless of rounding, and keep the exact punch data for the full retention period.