FLSA Time Rounding Policy 2026

Overview

In recent years, the practice of rounding hours worked has increasingly attracted regulatory and judicial attention under the Fair Labor Standards Act (FLSA), leading to updated guidance in 2026.

Key Requirements

A rounding policy may be acceptable under FLSA, provided that:

• The adopted policy averages out over time
• It does not result in systematic under-compensation of employees
• Proper documentation and audit trails are maintained

Employer Obligations

Employers must track all hours worked by non-exempt employees. The FLSA's definition of "hours worked" includes any time an employee needs to be on duty or on the employer's premises, as well as any time that they're suffered or permitted to work.

Record Retention

Payroll records, including timesheets, pay rates, schedules, and hours worked, must be kept for at least three years. Supporting documents used for wage calculations must be kept for at least two years.

Penalties for Non-Compliance

Non-compliance can result in:

• Up to $1,000 per violation
• Backpay owed to employees
• Liquidated damages (double the amount of backpay)
• Attorney fees