California employers have a duty to accurately track employee time to ensure that employees are fairly compensated for hours worked. Time rounding is a common practice that allows employers to simplify employee time tracking and payroll. However, a recent development in case law may impact employers that practice time clock rounding in California.
New Case Shifts Best Practices Time Clock Rounding in California
For years, employers have relied on consistent court rulings and agency decisions to dictate the rounding rules for timekeeping in California. Employers have been permitted to use time rounding systems when computing wages in California if the rounding policy is neutral in its application. In other words, rounding is permitted as long as it does not fail to compensate employees properly over a period of time. A recently decided case in California’s Sixth District Court of Appeal has sharply departed from previous rulings, and employers utilizing time rounding may need to adjust accordingly.
Computing Wages in California: What Is Time Clock Rounding?
Time clock rounding is the practice of rounding up or down an employee’s time worked for purposes of computing wages. For example, if an employee clocks in at 8:03 a.m. and clocks out at 3:57 p.m., many employers consider the shift worked from 8:00 a.m. to 4:00 p.m. Time rounding can be done manually in payroll and can also be done automatically with time clocking systems. Time rounding simplifies accounting practices for employers and also prevents employee theft.
The Fair Labor Standards Act (FLSA) has issued regulations outlining what is permitted with respect to time clock rounding. Under FLSA regulation 29 CFR § 785.48, employers are permitted to round employees’ time to the nearest five minutes or the nearest one-tenth or one-quarter of an hour.
In California, See’s Candy Shops, Inc. v. Superior Court (See’s) established that time rounding is permitted as long as it is neutral in its application. See’s has been cited by employers throughout the state when defending claims against underpayment due to time rounding.
Camp v. Home Depot and Time Clock Rounding in California
In Delmer Camp v. Home Depot USA, Inc. (Camp), plaintiffs filed a class action lawsuit challenging Home Depot’s rounding policies, claiming that the policy deprived them of wages for time they worked. Home Depot moved for summary judgment, asserting that its practices were neutral on their face and, thus, permitted under See’s. The trial court agreed and granted Home Depot’s motion for summary judgment.
Camp appealed, and the Sixth District reversed the trial court’s decision. The Sixth District panel held that Home Depot did not meet its summary judgment burden to show that there was no issue of material fact. The panel held that because Home Depot used a system to track each minute an employee worked but utilized a rounding system that resulted in underpayment to Camp, summary judgment was inappropriate.
The court emphasized that the decision was limited to the particular facts of the Home Depot case and urged the Supreme Court of California to weigh in on the issue of rounding rules for timekeeping in California. In the absence of clarification regarding the rounding rules for timekeeping in California, employers should consult with a knowledgeable California wage and hour defense attorney to determine if their current policies require revision.
What Should Employers Take from Camp?
The Camp decision was limited to the facts of the particular case and did not purport to prohibit all time rounding practices in California. The court also explicitly declined to rule on whether an employer who can track every minute of employee work is required to do so. However, the Camp decision can potentially be used to challenge a variety of rounding practices used when computing wages in California.
Ultimately, the state supreme court should resolve outstanding questions such as this one. In the meantime, employers should re-evaluate their rounding policies to determine whether they are underpaying employees. This is particularly relevant to employers who track employee time to the minute, as the Camp ruling seems to require that employers who capture time worked to the minute must pay employees for all time worked rather than rounding.
Employers who are currently unable to track employee time worked to the minute should review their employment policies to ensure that employees are fully compensated for time worked even though rounding may continue to be allowed under those circumstances.
Discuss Time Clock Rounding in California with an Experienced Employment Attorney
Susan A. Rodriguez of the Law Offices of Susan A. Rodriguez, APC is a skilled California wage and hour defense attorney who counsels large employers throughout Southern California. Susan can help employers reevaluate practices related to time clock rounding in California or defend those practices when an employee claims a time-rounding action. To get in touch with Susan today, call (213) 943-1323 or fill out this online contact form.
Posted by Susan A. Rodriguez, Esq.
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