By Laurie Nooren, SPHR, PHRca, SHRM-CP
For years, California courts have allowed the practice of rounding in/out times for the day up to the nearest quarter of an hour. This was before any real technology was available that allowed employers to easily calculate hours worked. The acceptance was due in part to a 2012 court case, See’s Candy Shops, Inc. v. Superior Court, which stated a rounding practice is lawful if it is “fair and neutral on its face” and applied “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.” However, today with time management software and the use of excel spreadsheets which easily calculate hours/minutes worked, rounding in/out times is becoming a thing of the past.
Last month, July 2023, in Woodworth v. Loma Linda University Medical Center (found here) the court decided with technology advancement that rounding is no longer acceptable. In this case, a nurse filed a class action and Private Attorneys General Act (PAGA) claim against the medical center for, among other things, failure to pay overtime wages based on the medical center’s rounding practices.
The medical center had previously completed an analysis of their rounding practices, finding them neutral on their face and without a failure to compensate employees for all hours worked. They continued to round employees’ time to the nearest tenth of an hour. However, they also had the exact timeclock punches (to the minute) for each of these employees in/out times. So why did they not pay employees to the minute?
The court said they recognize a lack of current legislation regarding rounding practices, but with technology being what it is now, there is no reason employers can’t pay employees for every minute worked. Since the medical center had the exact punch times, rounding should not be permitted. “If an employer . . . can capture and has captured the exact amount of time an employee has worked during a shift, the employer must pay the employee for ‘all the time’ worked.”
This case is awaiting review by the California Supreme Court, although a date for a hearing has yet to be scheduled. While we wait for the review, if you are rounding in/out times for the day (it is not permissible ever to round meal period in/out times), we strongly recommend you discontinue this practice, and pay non-exempt employees for all time worked. This means every minute of time worked – even 8:26 am to 11:57 am, back in at 12:29 pm, out at 5:02 pm. If you are using a time management system or electronic payroll system, in/out times should be easily captured to the minute. You may end up owing a little overtime at the end of the day; however, it may save you on future wage/hour and potential class action and PAGA claims.
As always, please reach out to your HR Consultant for questions about this or other HR related topics.