California Case Could Impact Legality of Time-Rounding Systems - HR Services | Audax HR Services

California Case Could Impact Legality of Time-Rounding Systems

California Case Could Impact Legality of Time-Rounding Systems

​The California Supreme Court recently agreed to hear a class-action case that could limit how employers in the state may use time rounding to calculate employees’ work hours.

In Camp v. Home Depot, an employee alleged that Home Depot’s policy of rounding clock-in and clock-out times to the nearest quarter-hour resulted in unpaid minimum and overtime wages. Home Depot is an Atlanta-based home improvement retailer with more than 2,300 stores in North America.

“Odds are that the [California] Supreme Court ultimately will declare that time rounding is not permissible when technology permits employers to accurately record the actual time worked by employees,” said Robin Samuel, an attorney with Baker McKenzie in Los Angeles.

Another attorney agreed.

“It seems like the courts are less inclined to allow employers to round time, if the time can be measured to the minute,” said Laura Reathaford of Lathrop GPM in Los Angeles. “However, we will see what the California Supreme Court says.”

According to legal precedent under See’s Candy Shops v. Superior Court, a time-rounding policy is lawful when it is fair, neutral and used in a way that doesn’t ultimately result in failure to pay employees properly for all the time they actually worked.

The plaintiff in Camp v. Home Depot claimed he wasn’t paid for at least 470 minutes over four and a half years of work due to the rounding policy. Home Depot argued its rounding policy was neutral on its face and neutral as applied.

In October 2022, a California Court of Appeal denied the company’s request to dismiss the case. It found that Home Depot did not meet its burden of proof that the plaintiff was properly compensated for all time worked.

“A few extra minutes of worktime periodically lost due to a purportedly neutral time-rounding policy can add up over time,” the appellate court said. Because the technology used in timekeeping systems has evolved, “it is not clear that any efficiencies were gained by The Home Depot in capturing time worked in minutes by plaintiff Camp and then rounding that time to the nearest quarter hour.”

Home Depot declined to comment on the ongoing case.

Tips for Legal Compliance

Employers in California should “round time evenhandedly (an equal amount, both up and down) and not solely in one direction,” Reathaford said. “It is also important to avoid policies that punish employees for coming in early. This necessarily can skew employee behavior, making an otherwise evenhanded rounding system seem uneven.”

Furthermore, employers “should audit pay and timekeeping practices frequently to identify issues and have them promptly corrected,” Samuel said. “The onus is on the employer to ensure that employees are paid for all time worked, and employers must proactively seek out and correct underpayments or nonpayments for employee work time.”

If an employer violates minimum-wage or overtime rules with its time-rounding practices, the penalties “range from liquidated damages, which are typically double the amount of wages owed, to PAGA penalties, which impose a $100 to $200 penalty per pay period when employees are underpaid in a pay period,” Reathaford said, referring to California’s Private Attorneys General Act (PAGA).

In addition to overtime and minimum-wage claims, “I can also see employees asserting meal and rest break claims in conjunction with time rounding, arguing that meals started late or were owed and not provided because the rounded time was not considered in determining when meal periods must begin or when meal periods or rest breaks are owed,” Samuel said. 

This content was originally published here.


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