August 28 Tip of the Week

“Round and Round, We Go”

One of the most important things for employees is their pay check.  Every employee wants to be paid for the time that they have worked and most employees want to be paid more for their time.  Employers, on the other hand, want to pay employees fairly and in accordance with the various labor and employment laws.  As inflation rises and economists look at whether wages have kept up with inflation and the demand for a higher minimum wage continues, plaintiffs’ attorneys and courts are routinely looking at employee wages and employer pay practices. 

            One of the most controversial aspects of employee pay is the practice of “rounding” employee work time.  While this practice is longstanding and has been permitted by law, many employees are beginning to question whether an employer’s practice of rounding their work time to the nearest quarter hour is fair.  A recent case in California, Camp v. Home Depot U.S.A. Inc., 84 Cal. App. 5th 638 (Cal. Ct. App. 2022), examined this practice and called into question the practice of rounding hours.  The decision was appealed and the California Supreme Court will be reviewing the decision.  While we await this California Supreme Court’s decision, employers need to be very cautious in how they engage in this rounding practice.  

Generally, both California and federal law has allowed employers to round employee work time to quarter hours.  This rounding practice is applied in the following manner. Typically, in a quarter hour, if an employee worked less than 8 minutes, the employer would round down.  If the employee worked 8 minutes or more, the employer would round up.  Rounding down means that the employee was not paid for the seven or less minutes that they worked, while rounding up means that an employee who worked 8 or more minutes would receive 15 minutes of pay or one quarter of their hourly wage. 

            An employee at Home Depot in California questioned their employer’s rounding practice and argued that he was not being paid for all the time he worked for his employer.  The court acknowledged that rounding practices have routinely been accepted under the law and by the courts; however, this acceptance was predicated on the fact that these rounding practices were neutral on their face and did not disadvantage employees.  In reviewing the Home Depot practice, the court noted that the employer was able to capture the actual time worked by the employee and there was a genuine issue of material fact as to whether the employe was properly paid for all time worked. 

            This case and the current focus on employee wages and fairness should cause employers to review their pay practices.  Rounding made sense when payroll systems and time clocks were not automated and it was difficult to actually track the hours worked.  In today’s day and age where employees have time clock apps on their mobile phones and computers can log an employee’s work hours, it is harder to justify the practice of rounding time.  And, it also makes it easier for an employee to challenge the “neutral” impact of an employer’s rounding practice.  When the practice can be shown to favor the employer and to make it so that employees are not paid for their actual time worked, the courts and the state and federal agencies will find the employer in violation of the wage and hour laws. 

            If you have questions regarding your pay practices or your employment policies, myHRcounsel is here to assist you.  You can submit questions to our qualified attorneys through our Ask portal or work with us to develop a legally compliant, best practices employee handbook.