Rounding policy falls flat in California

An employer’s quarter-hour rounding policy did not comply with California law because the company could and did track the exact time in minutes that employees worked each shift, but did not pay them for it, according to a California appeals panel.


Delmer Camp sued Home Depot for unpaid wages. He alleged that Home Depot’s electronic timekeeping system, which rounded an employee’s total daily work time to the quarter hour instead of using actual work time entered by the minute, resulted in non-payment. wages for an employee’s entire working time, in violation of the state labor code and wage ordinance 7.


The parties stipulated the analysis of certain time and payroll records which covered a total of 13,387 hourly employees, 4,282,517 shifts and 516,193 pay periods. The results showed that employees were paid for a number of minutes equal to or greater than their actual working time in 56.6% of the total number of shifts, with an average gain of 3.6 minutes and, for those who lost minutes, an average loss of 3.5 minutes.


Camp’s time and pay records showed that between March 30, 2015 and October 20, 2020, he worked 1,240 shifts and gained or lost minutes due to rounding at different times. For the entire period, however, it suffered a total net loss of 470 minutes, or approximately 7.83 hours, due to rounding.


The Home Depot responded with a motion for summary judgment, relying on See’s Candy Shops, Inc. v. Superior Courta 2012 decision in which a California Court of Appeals ruled that rounding policies are permitted under state law if they are neutral on their face, neutral as applied, and otherwise legal .


The trial court granted the motion and Camp appealed. Based on the particular facts of the case – and in light of recent California Supreme Court decisions relying on See the sweets— the overturned panel.


In 2018, the highest court in the state ruled Troester vs. Starbucks Corp. Considering an employee’s claim for unpaid wages when the employer required employees to work off the clock for several minutes per shift, the court ruled that the federal de minimis doctrine did not apply to the claims California wages and hours.


The court pointed out that California is free to offer greater protection to employees and that wage orders should be read with a liberal interpretation to compensate employees for all time worked.


Three years later, in Donohue v AMN Services, LLCthe California Supreme Court addressed the issue of rounding of hours in the specific context of meal periods, holding that employers cannot round in the context of meal periods.


Based on the “guidance and direction” provided by these opinions, the committee concluded that Home Depot had failed in its obligation to demonstrate that there was no question of material fact that could be the subject of an action. ‘a lawsuit regarding Camp’s claims for unpaid wages, where the employer could and did track the exact time in minutes an employee worked each shift and those records showed that Camp was not being paid for everything the time he was working.


The committee cited four reasons for its decision. First, the California Supreme Court pointed out that the Labor Code and the relevant wage order require that “employees be paid for all work performed”, and Camp presented evidence that he was not paid for all the work done.


Moreover, the regulatory regime is about the “little things,” the panel said. The state’s highest court “has indicated that even small amounts of work time — effectively amounts measured in minutes — are compensable when work time occurs regularly,” the court wrote. “[A]As evidenced by this case, a few extra minutes of working time periodically lost due to a supposedly neutral hourly rounding policy can accumulate over time. Here the evidence shows that [Camp] lost more than seven hours of work due to Home Depot’s quarter-hour rounding policy.


As a third reason, the panel pointed out that California has not adopted the federal standard, and although time rounding has been incorporated into federal regulations for more than 50 years, neither Labor Code laws nor any Wages Ordinance have been amended to recognize a time-rounding exception to the requirement that an employee be paid for all time worked.


Finally, the two Donohue and Troester questioned the efficiency gains historically attributed to time rounding given advances in technology that have made it easier and more accurate for employers to capture time worked by employees.


“We are not persuaded by Home Depot’s argument that calculating wages is ‘easier’ with time rounding,” the court wrote. “Most importantly, Home Depot cites no provision of California law that favors arithmetic simplicity over paying employees for all time worked.”


The judgment against Camp was set aside and the case was remanded.


To read the decision in Camp vs. Home Depot USA, Inc.Click here.


Why is this important: The panel made it clear that its analysis was limited to the specific facts of the case and did not address whether employers’ schedule rounding practices in other contexts complied with California law. However, the court took the opportunity to “respectfully invite” the California Supreme Court to rule on the validity of the rounding standard set forth in See the sweetsboth in the circumstances presented (where the employer can and has entered all the minutes worked by an employee and then applies a quarter-hour rounding policy) and with regard to the question of the neutral rounding of hours by employers, especially given the changing technological advancements that now exist to allow employers to track time more accurately.


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