By Laurie Nooren, SPHR, PHRca, SHRM-CP
For years, California courts permitted employers to round employee time entries to the nearest quarter hour. This practice originated in an era when employers did not have access to technology capable of easily and precisely tracking actual hours worked, and rounding was viewed as a practical administrative solution. To support this 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.” Today, advancements in timekeeping software and related technologies have automated the calculation of all hours and minutes worked, eliminating the need for manual tools such as paper timesheets and even Excel spreadsheets. As a result, rounding clock-in and clock-out times has become a thing of the past.
More recently, in 2022, the California Court of Appeals decided on Camp v. Home Depot, involving a wage-and-hour dispute between Home Depot and employees, including plaintiff Delmer Camp. Camp alleged that Home Depot’s electronic timekeeping system recorded employees’ exact minutes worked, but the company rounded the total daily hours to the nearest quarter-hour when calculating pay. He claimed this rounding practice resulted in underpayment of wages because he was not paid for all the time he actually worked.
At the trial level, Home Depot won summary judgment, with the court concluding its rounding policy was neutral and lawful under prior case law. On appeal, however, the California Court of Appeals reversed, holding that where an employer’s timekeeping system records exact minutes worked, and the records show an employee was not paid for all time worked, the employer cannot rely on a neutral rounding policy as a defense. The appellate court found this a case of unpaid wages, signaling that rounding practices may not comply with California law when exact minutes are available.
The case raised broader questions about the legality of time-rounding policies under California law and invited review by the California Supreme Court to clarify when and how employers can use rounding practices in timekeeping.
This case is awaiting review from the California Supreme Court, and a hearing date has not yet been scheduled. While we wait for the review, if you are rounding in/out times for the day, we strongly recommend you discontinue this practice and instead ensure non-exempt employees are paid 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. Keep in mind that rounding meal period in- and out-times is never permitted.
If you are using a time management system or an electronic payroll system, in/out times should be easily captured to the minute. While this approach may result in a small amount of additional overtime, it can help reduce the risk of future wage-and-hour claims.
As always, please reach out to your HR Consultant for questions about this or other HR related topics.