Why Was Home Depot's '7-Minute Rule' So Controversial, And Does It Still Exist?

When a company uses outdated timekeeping technology, things can get tough for employees. This was the case at Home Depot, which once observed a pay-clock system known as the 7-Minute Rule. This rule rounded total shift time to the nearest 15 minutes. For example, if you worked 7 minutes over an 8 hour shift, the Kronos time system Home Depot used kicked you down to 8 hours. If you worked 8 hours and 8 minutes, the system would pay you for an additional 15 minutes. While it sounds like that would all balance out at the end of a work week, a 2022 lawsuit claimed otherwise.

The lawsuit, brought in California, alleged that the rounding system had resulted in unpaid wages. Home Depot, who's closing all locations for 24 hours during these upcoming holidays, argued the system was neutral, and they could track employee time to the precise minute. But the California 6th District Court of Appeal ruled that because the ability to count shifts by the minute existed, the rounding policy couldn't be a defense to any unpaid wage claims. As of January 16, 2023, Home Depot began paying employees by the minute, dropping the 7-Minute Rule.

The decision impacted all Home Depot stores, not just the ones in California. In fact, Home Depot attributed its decision to evolving labor laws and timekeeping technology, without mentioning the lawsuit. Despite the motivations, this signaled an effort on the company's part to modernize its payroll practices to keep with the times.

The 7-Minute Rule used to round employee time to the nearest 15 minutes is a fairly common practice. It's often seen in the retail world, as well as hospitality, and even healthcare, which you should never use AI for. The 7-minute mark is considered a sweet spot because 7 minutes 30 seconds is half of 15 minutes. So up to 7 minutes 29 seconds, time is rounded down, and over that mark, time is rounded up.

This system is regulated by the U.S. government. Companies are allowed to round time, as long as it's neutral, which means the rule can't benefit employers. So, employees have to be paid for their time worked. Also, time cannot be rounded to anything larger than 15 minutes. This applies whether an employee is using a physical timeclock, or a timekeeping app. The Fair Labor Standards Act outlines the rounding policy, and companies using it are required to follow all parts of it.

The FLSA also dictates that whether or not a company uses the 7-Minute Rule, employees must be paid if they forget to clock in or out. This means if a worker is on time for a 9am shift but doesn't clock in, management must ensure that an in-punch is recorded in the system. Companies also cannot withhold pay from an employee for not clocking before or after their shift or deduct any money from their paycheck as punishment.