Sweet Victory for Rounding Policies

By: Sam G. Sherman, Esq.

Many California employers have rounding policies that alter employee time entries to the nearest tenth (or other increment) of an hour. There is no California statute authorizing this practice and the court’s have never specifically endorsed the legality of the practice.

The Plaintiff in Silva v. See’ Candies Shop, Inc., sued See’s Candies for various wage and hour violations and asked the court to rule before trial that See’s Candie’s rounding policy was illegal. The San Diego trial court agreed, and See’s Candies appealed.

See’s Candies’ policy allowed employees to clock-in or clock-out before or after their scheduled start times. However, See’s policy automatically rounded that entry to the nearest 1/10 of the hour. An employee clocking-in at 8:58 would be paid starting at 9. Plaintiff alleged that such a policy denied her all wages owed. It is worth noting that See’s also had a policy that employees should not begin any actual work prior to their scheduled start times even if they clocked-in early.

On appeal, the court upheld the policy. The Court first found that, similar to federal law, California law allows an employer to round employee time entries. Critical to the rule is that the policy is not implemented in such a way to lead to a reduction in employee compensation over time. This is both a subjective and objective test–the policy must be neutral on its face and it must be implemented in such a way that it does not lead to an actual reduction.

At the end of the day, rounding policies are still tricky business based on the rule that they must not lead to an actual reduction in compensation. Most employers that implement rounding polices don’t even check to see the net impact of the policy until the lawsuit is filed. Of course, at that point it is often too late.

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