California employers have rounded the time worked by their employees for decades. However, on February 1, 2023, the California Supreme Court agreed to hear oral arguments on a Court of Appeal decision that may terminate a California employer’s ability to round employee work time.
Over 60 years ago, the United States Department of Labor instituted a regulation pursuant to the Fair Labor Standards Act (FLSA) which allowed employers to legally implement time-rounding policies. (29 C.F.R. § 785.48(b))
The regulation states, “It has been found that in some industries, 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. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. 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.” (29 C.F.R. § 785.48(b), emphasis added.)
California employers have engaged in employee time rounding practices despite the fact that no California law specifically authorizes or prohibits employers from rounding. In 2012, the California the Court of Appeal first addressed time rounding by California employers and concluded that the rule in California is that an employer is entitled to round employee time to the nearest-tenth of an hour (i.e. 6 minute increments) if the rounding policy is fair and neutral on its face and “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.” (See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, 907)
The court in the See’s Candy Shops case determined that because there was no evidence that the policy of rounding to the nearest-tenth of an hour was unfair to, or was biased against the employees in the case, dismissing the employee’s rounding claims by way of summary judgment was appropriate. The court’s decision held that the See’s Candy Shops tardiness and related employee discipline policy, which incorporated its time rounding policy, did not violate California law.
In October 2022, a California Court of Appeal decision called into doubt the continuing ability to rely upon the holding of the See’s Candy Shops decision. Specifically, in Camp v. Home Depot U.S.A., Inc., California Court of Appeal, Case No. H049033, the California Sixth Appellate District, analyzed a quarter hour time rounding policy (i.e. 15 minute increments) utilized by Home Depot.
In Camp, the Court of Appeal was faced with a relatively unusual situation. There were two named plaintiff employees who appealed a trial court’s order granting a dismissal of the plaintiff employees’ claims through summary judgment. The two employees had been subjected to the same time rounding policy. The time rounding policy as applied to one of those employee plaintiffs, Adriana Correa, did not result in being paid any less than she would have received if she were paid based on her exact time for all hours worked. However, the other plaintiff employee, Delmar Camp, presented evidence that the time rounding policy utilized by Home Depot resulted in being paid 470 minutes less than he would have earned without time rounding.
Under the See’s Candy Shops decision, this is precisely the type of result where some employees are paid less while others are paid more under the time rounding policy. This rationale led the trial court to rule in favor of Home Depot and granted summary judgment.
The Court of Appeal in Camp analyzed the history of the See’s Candy Shops decision and several other recent cases. After doing so, the Court of Appeal held that in this situation, Home Depot’s neutral rounding policy was not sufficient to “meet its burden to show that there was no triable issue of material fact regarding plaintiff Camp’s claims for unpaid wages, where Home Depot could and did track the exact time in minutes that an employee worked each shift and those records showed that Camp was not paid for all the time he worked.” The Court of Appeal found that because the employee’s actual time worked had been recorded by Home Depot and there was a failure to pay the employee the full sum, the plaintiff employee could continue to pursue his lawsuit against Home Depot for its alleged failure to pay all wages due to him.
However, the Court of Appeal attempted to limit its decision by stating that it was not addressing the question of whether an employer may use time rounding when there is not an ability to capture the actual minutes worked by an employee. The Court of Appeal in Camp also did not opine as to “whether an employer who has the actual ability to capture an employee’s minutes worked is required to do so.”
The California Supreme Court granted review of the Camp Court of Appeal decision on February 1, 2023. It is possible that the California Supreme Court will reverse the Court of Appeal in Camp and in reinstitute the See’s Candy Shops rule. However, it seems far likelier that the California Supreme Court will endorse the Camp decision and clarify whether time rounding is appropriate under the facts of this case.
The California Supreme Court decision in Camp v. Home Depot, U.S.A., Inc. is not likely to be issued in 2023, but employers who utilize an employee time rounding policy may want to consult with competent employment counsel about whether they should eliminate their rounding practices, particularly given the possibility that a decision by the California Supreme Court may be retroactive.
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