The Ninth Circuit this week blessed an employer’s policy of rounding employee time punches to the nearest quarter hour, affirming summary judgment in favor of the company on an employee’s challenge to the rounding policy under the FLSA and the California Labor Code.
“This case turns on $15.02 and one minute.” From the first line of its decision in Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership, the Ninth Circuit signaled the common-sense approach that it would apply in assessing the legality of rounding practices. The court rejected plaintiff’s claims for $15.02, the total amount he claimed to have been underpaid due to the rounding policy, and one minute, the total amount of “off the clock” time for which plaintiff alleged he was not compensated. In the first published decision by any court of appeals on this issue, the 9th Circuit took a practical view of the federal rounding regulation, repeatedly referring to the purpose and effectiveness of rounding policies.
At issue in the case was whether the company’s rounding policy complied with federal and California law. Time Warner’s timekeeping system rounded all employee punches to the nearest quarter hour in a facially-neutral manner. The rounding was automatic and not subject to manager oversight or editing.
The Court’s Practical Interpretation of the Rounding Rule
The federal rounding rule permits employers to round employees’ time to the nearest 5 minutes, one-tenth, or quarter hour, so long as the rounding does not result, over time, in a failure to compensate employees for time worked. California courts and the California Division of Labor Standards Enforcement have applied this rule to rounding claims under California law as well.
The plaintiff claimed that any failure to pay any employee for any time worked caused by the rounding violates the rounding rule and state and federal wage laws. Noting that no other circuit court of appeals had addressed the issue in a published opinion, the Ninth Circuit ruled that requiring rounding to be neutral each pay period for each employee, would “gut the effectiveness” of using rounding because it would require employers to “unround” time each pay period to ensure its neutrality—an analysis the rounding regulation was designed to avoid. Thus, even though the rounding practice had a slight net negative impact to plaintiff (by $15.02), this did not establish that the practice was not neutral. In some pay periods the plaintiff benefited from rounding and in other pay periods he did not, and this demonstrated that Time Warner’s policy was neutral in application.
The Ninth Circuit further rejected plaintiff’s argument that California’s daily overtime requirement impacted the neutrality of Time Warner’s rounding because overtime minutes are more valuable because they are paid at an overtime rate. Noting that a California court had previously found this argument to be without merit, the Ninth Circuit noted that there is “no analytical difference between rounding in the context of daily overtime and rounding in the context of weekly overtime,” and that, because the rounding policy was neutral, employees could benefit from the rounding (and would receive overtime pay) just as easily as they could miss out on some overtime pay.
The De Minimis Rule Need Not Be Pled as an Affirmative Defense
The plaintiff’s absurd claim that he was entitled to pay for one minute of off-the-clock work was the basis for another employer victory in this decision: a ruling that the de minimis doctrine does not have to be pled as an affirmative defense. The court ruled the doctrine is a “rule,” not an affirmative defense that must be pled in an answer. Finally, the court, not surprisingly and in accordance with current case law, held that one minute of off-the-clock work is de minimis and thus need not be paid.
No Certification of “a Class Without a Claim”
The Ninth Circuit ruled on a final issue in a way that reflects common sense from the perspective of employers, but may be disconcerting for would-be class plaintiffs: that a court’s summary judgment decision on the merits of plaintiff’s individual claim “fully moots” the need to address the plaintiff’s motion for class certification, and a court should not be required to entertain plaintiff’s “attempt to certify a class without a claim.”