For years it has been an acceptable practice for California employers to “round” up or down the recorded work time of their employees for payroll purposes, as long as the rounding practices followed the Labor Commissioner’s guidelines and did not serve as a method to short an employee on their wages. This practice is now in question as a result of a recent court decision.
The California Supreme Court recently ordered the review of a lower court’s decision holding that “rounding employee time” violated California law. (See’s Candy Shops, Inc. v. Superior Court of San Diego)
Historically, the Federal Department of Labor (DOL) has taken the position that “rounding” to the nearest one-tenth or one-quarter of an hour is permissible on the condition that, over a period of time, such practice does not fail to compensate employees for all hours worked. The rationale being that the rounding up and rounding down would even out over time.
The California Division of Labor Standards Enforcement (“DLSE”) adopted the position of the DOL, and prior to this recent case decision there had been no other California court decision finding to the contrary. So the practice had been implemented without controversy.
However, the San Diego Superior Court found that the See’s Candy Company had violated California law by their rounding the time entries of their employees to the nearest six minutes. The Supreme Court has taken this case up on review because it is contrary to established interpretations of the Labor Code.
If the ruling by the Supreme Court is against See’s Candy’s rounding practices, it is likely that employers will be faced with more lawsuits challenging the validity of rounding practices which up until now had be lawful.
A finding in favor of See’s Candies would ensure that rounding practices are lawful as long as they comply with the requirements of the DLSE and the DOL.
What Should I Do?
• Ensure that employees are paid for all actual time worked.
• If the time worked is rounded “up,” it also must be rounded “down” so that it evens out.