Rounding the Clock – Timekeeping

See’s Candy continues to have a special place in the hearts of Californians.  They not only make a great product, but they recently won an appeal of  a trial court decision that will make a long time timekeeping practice for all California employers a little less risky. 

In a nutshell, a  See’s Candy Shops, Inc. employee filed a class action lawsuit around several of the company’s wage and hour practices, claiming they violated state law. (See’s Candy Shops, Inc. v. Superior Court, No. D060710 (Cal. App. 4th, Oct. 29, 2012))  One of the claims included See’s timekeeping policy that allowed the rounding of time up or down to the nearest one-tenth of an hour (every six minutes) on the company’s time clock system.  For example, if an employee clocked in at 7:58 a.m. the timekeeping system would round up to the time to 8:00 am. If the employees did not clock in until 8:02 a.m. then the timekeeping system rounded down the time to 8:00 a.m.  See’s claimed their policy did not violate state or federal law allowing the rounding of time.

The timekeeping rounding standard observed by See’s is one that has been allowed by the federal Department of Labor (DOL) for many years.  (However, until See’s there were no known California court decisions ruling that the DOL regulation applied in California.)   Several years ago the Dept. of Labor regulation was  adopted by the California Division of Labor Standards Enforcement (DLSE). The adopted standard allows for rounding employee’s hours to the nearest five minutes, or one-tenth or quarter of an hour, and presumes that in doing so, the time that is rounded “averages out so that the employees are fully compensated for all the time they actually worked.”

See’s lost in the trial court based on the ruling that this practice was not lawful in California.  But the Court of Appeal considered the federal regulations and concluded that  “an employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and ‘it is used 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.’”

The take away – There is not a problem in rounding time worked in California as long as it doesn’t result in employees not being properly compensated for all hours worked over a period of time.  The early/late ins and outs should even out over time, although the court did not designate the period of time.  Please note – rounding  can only be applied to time worked. Employers may not round up or down for meal or rest breaks.

This decision notwithstanding, we encourage employers to think twice about implementing this type of policy.  Rounding practices may still violate California law if they do not ultimately average out to ensure the employees are not shorted any time worked.

rounding the clock