California Employers Allowed to Round Employee Time

In See’s Candy v. Superior Court, the California Court of Appeal for the Fourth Appellate District held that California employers are allowed to implement a policy of rounding an employee's time up or down.

Pamela Silva brought a wage-and-hour class action complaint against her former employer, See's Candy Shops, Inc.  See’s Candy used a round-up policy regarding employee timekeeping  That is, in and out punches on the employee’s time cards were  rounded (up or down) to the nearest tenth of an hour.

See's Candy's alleged in two affirmative defenses that (1) any unpaid amounts due to time rounding were de minimis; and (2) the nearest-tenth rounding policy was consistent with federal and state law.  See's Candy urged the court to adopt a federal regulation utilized by the California Division of Labor Standards Enforcement (DLSE) that allows employers to compute employee work time by using a nearest-tenth rounding method “provided that 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.”    29 C.F.R. § 785.48(b).

Silva argued there is no California statutory or case authority allowing See's Candy to use a rounding policy.  Further, the policy violated Labor Code §204, which generally requires an employer to pay an employee “All wages” every two weeks, and §510, which requires an employer to pay an employee premium wages for “Any work” after eight hours per day or 40 hours per work week.  The trial court agreed with Silva, granted summary adjudication in her favor, and entered an order dismissing See’s Candy’s affirmative defenses as to rounding of time.

In reversing the trial court, the Court of Appeals noted that in the absence of controlling or conflicting California law, California courts should look at federal law for guidance.  In holding that the California Labor Code does not prohibit employers from rounding time, the Court stated that “ an employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face”  and “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 Court emphasized that if the employer applies a consistent rounding policy that on average favors neither overpayment nor underpayment it complies with California law.