By Jaimee K. Wellerstein, Esq. and Saba Zafar, Esq.
For decades, California law has permitted employers to round employee time entries as long as the rounding policy is neutral on its face and does not disadvantage employees. However, on February 1, 2023, the California Supreme Court agreed to hear oral arguments on a Court of Appeal decision that could end California employers’ ability to round employee work time altogether.
There is no specific California statute that either authorizes or prohibits employers from rounding; however, case law has provided guidance to employers on the topic. In See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, California’s 4th District Court of Appeal concluded 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.”
A decade later, the California Court of Appeal partially overturned the See’s Candy decision in Camp v. Home Depot U.S.A., Inc., No. H049033, 2022 WL 13874360 (Oct. 24, 2022), where the Court held that at least when the employer can and does capture time worked down to the minute (such as with electronic timekeeping), it cannot justify not paying an employee for every minute worked by relying on a facially neutral policy of rounding time. The Appellate Court based its decision on the recent California Supreme Court decisions, Troester v. Starbucks Corp. (2018) 5 Cal. 5th 8291 and Donohue v. AMN Services, LLC (2021) 11 Cal. 5th 58. 2In these cases, the Supreme Court found, respectively, that California law requires employers to compensate employees for all time actually worked and that rounding punches for meal period purposes violated California law.
Given the holdings in Troester and Donohue and Home Depot’s rounding policy, the 4th District Court of Appeal’s decision is not surprising, although it may seem unfair for employers who rightfully relied on See’s Candy. Specifically, the employer in Camp, Home Depot, rounded timekeeping punches to the nearest quarter hour. For example, if the total shift was 6 hours and 3 minutes, the total shift hours would be rounded to 6 hours, but if the total shift was 6 hours and 8 minutes, the total shift hours would be rounded to 6.25 hours. Because the timekeeping system would round both ways, it was deemed a facially neutral rounding policy. Additionally, because the rounding policy was more beneficial to employees as a whole, it was also deemed a compliant rounding practice — at least under the See’s Candy standard.
However, the Camp court found that because Home Depot recorded the employee’s actual time worked but did not pay the employee for each minute worked, the plaintiff employee could continue to pursue his lawsuit against Home Depot for its alleged failure to pay all wages due to him.
Realizing that it was overturning a longstanding precedent, the Camp Court invited the California Supreme Court to review the decision and provide final guidance on timekeeping rounding for California employers — which the California Supreme Court has now agreed to do.
It is possible that the California Supreme Court will reverse the Court of Appeal decision and reinstitute the See’s Candy rule regarding time-rounding. However, it seems likelier that the California Supreme Court will validate the Camp decision and time-rounding will become obsolete.
In light of the Court of Appeal decision and pending California Supreme Court ruling, California employers are advised to eliminate the use of rounding policies altogether. Although the decision leaves open the door for employers to use a neutral rounding policy if their timekeeping systems do not record time to the minute, those employers should explore the feasibility of implementing a system or software that does record employee time to the minute. We strongly recommend California employers eliminate time rounding altogether and ensure proper systems are in place to track and pay employees for every minute worked. If you have any questions about how this change in law may affect your business or need assistance preparing compliant policies or revising your practices, please contact your attorneys at Bradley, Gmelich + Wellerstein LLP. We are here to help.
1The California Supreme Court held that the de minimis doctrine does not apply to claims brought under California law.
2The California Supreme Court held that it is unlawful to time-round with regard to meal periods.
Jaimee K. Wellerstein, Esq. is a Partner at Bradley, Gmelich & Wellerstein LLP, and the Head of the firm’s Employment Department. Jaimee concentrates her practice on representing employers in all aspects of employment law, including defense of wage and hour class actions, PAGA claims, discrimination, retaliation, harassment, wrongful discharge, misclassification, and other employment-related lawsuits. She also provides employment counseling and training in all of these areas.
Jaimee routinely represents employers in federal and state courts and in arbitration proceedings throughout the state, as well as administrative proceedings before the Equal Employment Opportunity Commission, the California Department of Labor Standards Enforcement, the United States Department of Labor, and other federal and state agencies.
Jaimee assists as a Legal Advisor to CALSAGA and is a member of ASIS International. She is rated AV-Preeminent by Martindale-Hubbell, the highest peer rating available.
Saba Zafar, Esq. is Special Counsel in Bradley, Gmelich & Wellerstein LLP’s Employment Law Department. Saba has over a decade of experience as an attorney, primarily in employment law. Saba focuses her practice on providing strategic advice and counsel in all aspects of employment law and workplace matters, including drafting and implementation of HR policies and procedures, Employment Handbooks, and providing advice to clients on personnel issues as well as general business matters.
Prior to joining the firm, Saba was a Senior Counsel providing advice and counsel to mid-sized to large businesses on employment law compliance and day-to-day employment issues, including implementing policies and procedures, employee classifications, employment separations, managing and disciplining employees, and COVID-19 rules and regulations. Saba also handled a wide variety of employment matters in state and federal court, including cases involving wrongful termination, discrimination, and wage-related cases.
In her spare time, Saba has volunteered as a Mediator for the Department of Consumer Affairs and the Orange County Human Resources Department. She was also a Volunteer Tutor for Schools on Wheels, tutoring elementary school students on skid row in Los Angeles. Prior to practicing law, Saba was a Judicial Extern for the California Court of Appeal, Second Appellate District.