California courts have long approved neutral rounding policies (See’s Candy Shops v Superior Court, 210 Cal App. 4th 889 (2012). However, the California Court of Appeals recently in Camp v. Home Depot USA, Inc. No. H049033, 2022 WL 13874360 (Cal App. 2022) called into question the propriety of using a facially neutral rounding system when an employee’s time can be accurately tracked to the minute.
The Camp court held that employers who “can capture and have captured the exact amount of time that an employee has worked during a shift” must fully compensate employees for all the time worked rather than rounded time, even if the rounding practice is neutral on its face and neutral as applied.
Employer Home Depot had a practice of recording employee time to the minute when an employee punched in or out, but then rounded the time to the nearest quarter-hour. Plaintiffs Camp and Correa filed a class action, alleging unpaid minimum and overtime wages under the California Labor Code. Camp claimed to have lost a total of 470 minutes over the course of four and a half years. Correa conceded that she was overpaid as a result of the rounding practice.
Trial Court Decision:
The trial court found in favor of the employer, stating that its rounding policy was neutral on its face and as applied and therefore in line with the rounding policies approved in the See’s appellate opinion.
Camp Appellate Court Decision:
The Appeals Court reversed the lower court decision explaining that pursuant to Labor Code Section 510, employees must be compensated for all time worked. In Camp’s case, he was not compensated for 470 minutes of work over a four year period despite the employer’s ability to electronically capture the exact amount of time an employee has worked during a shift.
The appellate court in Camp limited its holding to the specific facts of the case – i.e., where an employer can and did track the exact time in minutes that an employee works. Thus, the Camp decision did not prohibit all time rounding practices such as when a neutral rounding policy is used due to the inability to capture actual minutes worked. The Camp decision also declined to state whether an employer who can capture an employee’s exact minutes worked must do so.
The Court of Appeal explicitly invited the California Supreme Court to address the propriety of rounding in the face of technological advances that make it possible for employers to capture the exact time that an employee clocks in and out. Additionally, the Appeals Court invited the high court to review the overall issue of neutral time rounding by employers and to provide guidance on the propriety of all time rounding policies and practices by employers.
The Camp decision is on appeal to the California Supreme Court but there has presently been no announcement that the high court will hear the appeal. However, it is not unreasonable to conclude that if the high court hears the Camp appeal, the circumstances under which rounding is permissible will be further limited or perhaps held not to exist at all.
Takeaways for Employers
In light of the Camp decision and pending a decision from the California Supreme Court on the validity of time-rounding policies, it is recommended that employers should:
- Review their rounding practices to insure they are facially and statistically neutral as applied.
- Limit the use of rounding to situations where it is impossible or difficult to ascertain the actual time worked by the employee.
- Until the California Supreme Court weighs in on the validity of time-rounding standards, employers who use time-rounding practices in conjunction with electronic timekeeping systems that capture actual time worked, should discontinue use of time-rounding practices since they could result in an underpayment of wages and a potentially successful wage claim pursuant to the Camp decision.
The content was provided by WPCCA legal counsel and is for general informational purposes only. Readers should consult with their own legal counsel for company specific legal advice.