The rounding policy falls flat in California

An employer’s quarter-hour rounding policy didn’t comply with California law because the company could and did track the exact time, in minutes, that employees worked each shift — but didn’t pay them to do it, according to a California appeals body.

Delmer Camp sued Home Depot for unpaid wages. He alleged that Home Depot’s electronic time tracking system, which rounded an hourly employee’s total daily hours worked to the nearest quarter of an hour instead of using actual hours worked per minute, resulted in wages not being paid for an employee’s total hours worked in violation of that State Labor Code and the Wage Code 7.

The parties undertook to analyze certain time and pay records totaling 13,387 hourly workers, 4,282,517 shifts and 516,193 pay periods. The result was that workers were paid for a number of minutes equal to or greater than their actual hours on 56.6 percent of all shifts, with an average gain of 3.6 minutes and an average loss for those who did had lost by 3.5 minutes.

Camp’s time and salary records showed that he worked 1,240 shifts between March 30, 2015 and October 20, 2020 and gained or lost minutes at various times due to rounding. Over the entire period, however, it suffered a total net loss of 470 minutes, or around 7.83 hours, due to rounding.

Home Depot responded with a summary judgment motion, relying on See’s Candy Shops, Inc. v. Superior Courta 2012 decision in which a California appeals court ruled that rounding policies are permissible under state law if they are neutral in appearance, neutral in application, and lawful otherwise.

The court granted the motion, and Camp appealed. Based on the specific facts of the case – and in light of recent California Supreme Court decisions that build upon them See Candy– the panel reversed.

In 2018, the country’s highest court ruled Troester v Starbucks Corp. Considering a worker’s claim for unpaid wages where the employer required workers to work several minutes per shift off-clock, the court ruled that the federal de minimis doctrine did not apply to California wage and hour claims be applicable.

The court emphasized that California is free to provide greater protections for workers and that the wage codes must be read with a liberal construction in order to compensate workers for all hours worked.

Three years later, in Donohue v. AMN Services, LLCThe California Supreme Court addressed the issue of rounding of time in the specific context of meal times and held that employers may not round in the context of meal times.

Considering the “guidance and direction” of these opinions, the panel concluded that Home Depot failed in its burden of proving that there were no conclusive facts relating to Camp’s claims for unpaid wages that the employer could pursue and did the precise Time in minutes that an employee worked each shift and these records showed that Camp was not paid for the entire time he worked.

The panel gave four reasons for its decision. First, the California Supreme Court has emphasized that the Labor Code and related wage code require that “employees be paid for all work performed,” and Camp presented evidence that he was not paid for all work performed.

In addition, the regulatory system deals with “little things,” the panel said. The country’s highest court “has pointed out that even short working hours – measured in minutes – are eligible for compensation if the working hours are regular,” the court wrote. “[A]As this case has shown, a few extra minutes of work time regularly lost due to a supposedly neutral time-rounding policy can add up over time. Here the evidence reflects that [Camp] lost more than seven hours of work due to Home Depot’s quarter-hour rounding policy.”

As a third reason, the panel noted that California has not adopted the federal standard, and although time rounding has been incorporated into federal regulations for over 50 years, neither the Labor Code nor any wage code has been amended to recognize time rounding. Rounding exemption from the requirement that an employee be paid for all hours worked.

Finally both Donohue and Comforter questioned the efficiencies historically attributed to time rounding, given technological advances that have allowed employers to more easily and accurately record hours worked by workers.

“We are unconvinced by Home Depot’s argument that calculating wages with rounded times is ‘simpler,'” the court wrote. “More importantly, Home Depot does not cite a provision in California law that favors arithmetic simplicity over paying employees for total hours worked.”

Camp’s verdict was overturned and the case remanded.

read decision Camp vs. Home Depot USA, Inc.Click here.

Why it matters: The panel was aware that its analysis was limited to the specific facts of the case and did not address the issue of whether the employer’s practices of rounding hours in other contexts are consistent with California law. However, the court took the opportunity to “respectfully invite” the California Supreme Court to rule on the validity of the rounding standard articulated therein See Candyboth in the circumstances presented (where the employer can and does record all the minutes an employee has worked and then apply a quarter-hour rounding policy) and in relation to the issue of neutral time rounding by the employer, particularly in relation to the Technology advances that exist today to enable employers to keep track of time more accurately.