ELECTRONIC TIME ROUNDING
If an employer can capture the exact amount of time an employee has worked during a shift, then the employer must pay the employees for all the time worked, even if it uses a purportedly “neutral” rounding system. Camp v. Home Depot U.S.A, Inc., 84 Cal.App.5th 638, 660 (2022) (review granted February 1, 2023); and see Troester v. Starbucks Corp., 5 Cal.5th 829, 840 (2018) (noting Wage Orders specify employees should be paid “for all hours worked.”). “Where [an employer] could and did track the exact time in minutes that an employee worked each shift and those records showed that [the employee] was not paid for all the time he worked…” then a showing of a neutral time rounding policy is not a viable defense. Id. at 644. Further, the California Supreme Court has stated that the Labor Code and the relevant wage order “contemplate[] that employees will be paid for all work performed.” See id. at 657.
The court expressly adopted the Supreme Court’s language in Troester, holding that “[a]lthough time rounding has been incorporated into the Code of Federal Regulations for over 50 years, neither the Labor Code statutes, nor any wage order has been amended to recognize [a time rounding exception to the requirement that an employee be paid for all time worked].” See Camp v. Home Depot U.S.A, Inc., 84 Cal.App.5th 638, supra (2022) (review granted February 1, 2023). The Home Depot court further noted that the sole and primary purpose of rounding policies is to provide efficiency in recording time in certain industries, but such permissibility is subject to review and change as technology has advanced. See id. at 658. Thus, where timekeeping systems can track time with precision minute-by-minute, then no efficiency issues exist to justify any rounding policy, regardless of neutrality. See id. at 659-60.
An employer complies with rounding regulations if on average the policy favors neither overpayment nor underpayment. See’s Candy Shops Inc. v. Superior Court, 210 Cal.App.4th 889, 901 (2012). A rounding policy may be lawful if it is neutral on its face and as applied. Id. at 903. However, where the rounding policy systematically under-compensates employees over time and provides a net benefit to the employer, it may be considered unfair, non-neutral, and unlawful. See AHMC Healthcare, Inc. v. Super. Ct., 24 Cal.App.5th 1014 (2018). Most importantly, California does not incorporate the federal de minimis rule into wage and hour law or general state law, so any bias, however small, may establish an illegal practice. Troester v. Starbucks Corp., 5 Cal.5th 829, 841 (2018); see also Camp, supra, at 654-55 (“Nothing in the language of the wage orders or Labor Code shows an intent to incorporate the federal de minimis rule…Although [the United States Supreme Court opinion articulating the de minimis rule] has been the law for 70 years and has been incorporated into the Code of Federal Regulations for over 50 years, neither the Labor Code statutes nor any wage order has been amended to recognize a de minimis exception.”). Any bias—or discrepancy—no matter how small, may establish an illegal practice. Id. at 841.
California favors compensating employees for all time worked:
[The employee] is seeking payment for 12 hours and 50 minutes of compensable work over a 17-month period, which amounts to $102.67 at a wage of $8 per hour. That is enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares. What [the employer] calls “de minimis” is not de minimis at all to many ordinary people who work for hourly wages.
Troester, supra, at 847-48.
In the 2021 Donohue v. AMN Services, LLC decision, the California Supreme Court overturned the decision rendered by the Court of Appeal and held that “employers cannot engage in the practice of rounding time punches – that is adjusting the hours than an employee has actually worked to the nearest preset time increment – in the meal period context.” The Court reasoned that California’s “meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective.” In their decision, the Court stated that “time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment state.”
In Donohue, the employer had used an electronic time-keeping system called “Team Time” that would round punches to the nearest 10-minute increment. “For example, if an employee clocked out for lunch at 11:02 am and clocked back in at 11:25 am, Team Time would have recorded the time punches as 11:00 am and 11:30 am. Although the meal break was actually 23 minutes, it would have been recorded as 30 minutes. The same applies for if an employee clocked in for work at 6:59 am and clocked out for lunch at 12:04 pm, the time would have been rounded to 7:00 am and 12:00 pm. There, the actual meal period would have started five minutes after the five hours of work mark.” The Court reasoned that the employer relied on Team Time to round
time punches to determine whether a meal period was short or delayed.
Following Donohue, employers should review their practices for time punches in the meal period and the payment of wages context to determine that they are lawful. The Court’s decision has shifted the burden to employers to show that meal break periods were provided lawfully when an employee’s timecard reflects otherwise, and that each employee was paid all wages for all time worked.
For assistance or more information about how this ruling may impact your business, contact the employment attorneys at San Diego Biz Law, APC.
The material in this article, provided by San Diego Biz Law, APC, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes.
ELECTRONIC TIME ROUNDING
If an employer can capture the exact amount of time an employee has worked during a shift, then the employer must pay the employees for all the time worked, even if it uses a purportedly “neutral” rounding system. Camp v. Home Depot U.S.A, Inc., 84 Cal.App.5th 638, 660 (2022) (review granted February 1, 2023); and see Troester v. Starbucks Corp., 5 Cal.5th 829, 840 (2018) (noting Wage Orders specify employees should be paid “for all hours worked.”). “Where [an employer] could and did track the exact time in minutes that an employee worked each shift and those records showed that [the employee] was not paid for all the time he worked…” then a showing of a neutral time rounding policy is not a viable defense. Id. at 644. Further, the California Supreme Court has stated that the Labor Code and the relevant wage order “contemplate[] that employees will be paid for all work performed.” See id. at 657.
The court expressly adopted the Supreme Court’s language in Troester, holding that “[a]lthough time rounding has been incorporated into the Code of Federal Regulations for over 50 years, neither the Labor Code statutes, nor any wage order has been amended to recognize [a time rounding exception to the requirement that an employee be paid for all time worked].” See Camp v. Home Depot U.S.A, Inc., 84 Cal.App.5th 638, supra (2022) (review granted February 1, 2023). The Home Depot court further noted that the sole and primary purpose of rounding policies is to provide efficiency in recording time in certain industries, but such permissibility is subject to review and change as technology has advanced. See id. at 658. Thus, where timekeeping systems can track time with precision minute-by-minute, then no efficiency issues exist to justify any rounding policy, regardless of neutrality. See id. at 659-60.
An employer complies with rounding regulations if on average the policy favors neither overpayment nor underpayment. See’s Candy Shops Inc. v. Superior Court, 210 Cal.App.4th 889, 901 (2012). A rounding policy may be lawful if it is neutral on its face and as applied. Id. at 903. However, where the rounding policy systematically under-compensates employees over time and provides a net benefit to the employer, it may be considered unfair, non-neutral, and unlawful. See AHMC Healthcare, Inc. v. Super. Ct., 24 Cal.App.5th 1014 (2018). Most importantly, California does not incorporate the federal de minimis rule into wage and hour law or general state law, so any bias, however small, may establish an illegal practice. Troester v. Starbucks Corp., 5 Cal.5th 829, 841 (2018); see also Camp, supra, at 654-55 (“Nothing in the language of the wage orders or Labor Code shows an intent to incorporate the federal de minimis rule…Although [the United States Supreme Court opinion articulating the de minimis rule] has been the law for 70 years and has been incorporated into the Code of Federal Regulations for over 50 years, neither the Labor Code statutes nor any wage order has been amended to recognize a de minimis exception.”). Any bias—or discrepancy—no matter how small, may establish an illegal practice. Id. at 841.
California favors compensating employees for all time worked:
[The employee] is seeking payment for 12 hours and 50 minutes of compensable work over a 17-month period, which amounts to $102.67 at a wage of $8 per hour. That is enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares. What [the employer] calls “de minimis” is not de minimis at all to many ordinary people who work for hourly wages.
Troester, supra, at 847-48.
In the 2021 Donohue v. AMN Services, LLC decision, the California Supreme Court overturned the decision rendered by the Court of Appeal and held that “employers cannot engage in the practice of rounding time punches – that is adjusting the hours than an employee has actually worked to the nearest preset time increment – in the meal period context.” The Court reasoned that California’s “meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective.” In their decision, the Court stated that “time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment state.”
In Donohue, the employer had used an electronic time-keeping system called “Team Time” that would round punches to the nearest 10-minute increment. “For example, if an employee clocked out for lunch at 11:02 am and clocked back in at 11:25 am, Team Time would have recorded the time punches as 11:00 am and 11:30 am. Although the meal break was actually 23 minutes, it would have been recorded as 30 minutes. The same applies for if an employee clocked in for work at 6:59 am and clocked out for lunch at 12:04 pm, the time would have been rounded to 7:00 am and 12:00 pm. There, the actual meal period would have started five minutes after the five hours of work mark.” The Court reasoned that the employer relied on Team Time to round
time punches to determine whether a meal period was short or delayed.
Following Donohue, employers should review their practices for time punches in the meal period and the payment of wages context to determine that they are lawful. The Court’s decision has shifted the burden to employers to show that meal break periods were provided lawfully when an employee’s timecard reflects otherwise, and that each employee was paid all wages for all time worked.
For assistance or more information about how this ruling may impact your business, contact the employment attorneys at San Diego Biz Law, APC.
The material in this article, provided by San Diego Biz Law, APC, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes.