The California Supreme Court has agreed to review a California Court of Appeal decision on a case involving timekeeping rounding policies.
On February 1, the state high court granted a petition to review the California Court of Appeal decision in Camp v. Home Depot U.S.A., Inc. In the appellate court’s decision, Home Depot’s neutral rounding policies were considered invalid for timekeeping purposes as the employer used electronic time clocks that recorded punches to the minute.
Notably, the decision partially overturned a decade-old appellate court decision in See’s Candy Shops, Inc. v. Superior Court, which held that as long as an employer’s timekeeping was neutral both in policy and practice, the rounding practice was lawful.
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, this is considered a facially neutral rounding policy.
Audit of Time Records
To determine if the rounding was neutral in practice, a forensic audit of a representative sample of Home Depot’s time records for the relevant four-year time-period found that:
• In 49.2% of the applicable pay periods, employees gained an average of 3.6 additional minutes per shift;
• In 47.1% of the applicable pay periods, employees lost an average of 3.5 minutes per shift; and
• In 3.7% of the applicable pay periods, employees were paid for actual time worked.
Because Home Depot’s rounding policy was more beneficial to its employees as a whole, it is a compliant rounding practice — at least under the See’s Candy standard.
In 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.
Knowing these cases, the appellate court struggled to reconcile the See’s Candy standard and instead determined that where the employer recorded accurate time punches, rounding is no longer appropriate.
Realizing that it was overturning a longstanding precedent, the appellate court invited the California Supreme Court to review the decision and provide final guidance on timekeeping rounding for California employers — which the high court has now agreed to do. The process is in its early briefing stages so it might be months or even years before employers get a decision.
In the meantime, because of how risky timekeeping rounding is now, employers with such practices should immediately consult legal counsel for review of those practices.
CalChamber members can read more about Camp v. Home Depot in the HRCalifornia Extra article Time Rounding: Should Employers Do So When They Track Employees’ Actual Hours Worked?
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