Authored by Brandon McKelvey
Recently a San Diego Superior Court found that See’s Candy Shops violated California law by rounding employee time entries to the nearest six minutes. See’s Candy Shops petitioned the California 4th District Court of Appeal for review, and the California Chamber of Commerce has asked the appeals court to review the trial court’s ruling because of the widespread concern to California employers on the issue of rounding.
For years, the position of both the US Department of Labor (“DOL”) and the state Department of Labor Standards Enforcement (“DLSE”) has been that rounding employee time entries is lawful. The DOL’s regulations and the DLSE enforcement manual permit rounding “to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour.” Both the DOL’s regulations and the DLSE’s enforcement manual note, however, that rounding is acceptable provided that the practice 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.”
There have been a growing number of lawsuits in California challenging employer rounding practices. These lawsuits are often brought as class actions and allege that employer rounding in the aggregate results in the failure to compensate employees for time worked. This is a big concern for California employers. As the California Chamber of Commerce explained in it’s amicus letter to the California appeals court, “the trial court decision in the See’s case may lead to the filing of many more class actions attacking rounding practices that employers have believed were completely lawful. Many employers will feel they have no choice but to stop their practice of rounding time to avoid the risk of class litigation, which often leads to large settlements due to the costs of defending these cases.”
Employers in California who round employee time entries should be aware of the potential threat for litigation and should review their rounding policies and practices with counsel to evaluate potential issues and exposure.