On July 24, 2023, the California Court of Appeal issued a partially published opinion negatively impacting employers who have a neutral time clock rounding policy. Employers should be prepared to take appropriate action to avoid class action liability.
The End of Rounding Time in California is Imminent
The plaintiff in the case was a registered nurse at a university medical center. She filed a class and PAGA action against the medical center after her employment ended, alleging a host of wage and hour violations, including a claim for failure to pay overtime wages partially premised on the employer’s timecard rounding practice.
The employer had a neutral rounding policy that rounded time punches to the nearest tenth of an hour. 51.4% of employees were paid for more time than they were on the clock, 47.4% were paid for less, and the remaining 1.1% were unaffected. The employer’s expert concluded that the policy was permissible because there was no systematic advantage to either the medical center or the employees based on the neutral timecard rounding practice.
The court rejected this policy, concluding that when 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.” The court also noted the lack of legislation recognizing a rounding exception and explained that technology now enables employers to capture time more precisely. Therefore, the court stated rounding should not be permitted, and employees are to be paid for all the time worked.
Conclusion For Employers
The California Supreme Court has not given clear guidance on whether rounding time is permissible in California. While intermediate appellate authorities are split on the issue of a neutral rounding policy, recent trends point to an imminent prohibition on the practice of rounding time. Employers should review their timekeeping practices and consider ending any rounding policy, even if the policy is facially neutral. Employers should also review their practices to ensure that employees are paid for “all hours worked,” to reduce potential wage and hour exposure.
Questions
If you have any questions regarding this Legal Alert, please contact the following attorney from our office or the attorney with whom you typically consult.
Alec Tyra
atyra@kmtg.com | 916.321.4293