Many employers round the time of arrival or departure for non-exempt employees to the nearest five minutes, tenth of an hour, or quarter of an hour. Many of those employers have rounded time for years without thinking about whether doing so is legal. Recently, a number of class action suits have been brought against employers based on their rounding practices. Those suits have highlighted the fact that, while the Fair Labor Standards Act (FLSA) does allow rounding of time, there are very specific requirements that must be met to do so.
The FLSA requires that employers pay their workers for every hour they're on the job. However, the Department of Labor, which administers the law, recognizes that it's impractical to count every individual minute of work time or to require that employees start and stop working on exact increments. As a result, the regulations allow for rounding as long as it is done neutrally or favors the employee. In other words, the employer must round up and also round down.