While neutral rounding policies have historically been approved by California courts, the Sixth District California Court of Appeal recently held in Camp v. Home Depot, No. H049033, 2022 WL 13874360 (Oct. 24, 2022), that employers who utilize timekeeping systems that can capture each minute worked by employees must fully compensate those employees for all time worked, instead of rounding their time (even if the rounding policy is neutral on both its face and application). 

Thus, California employers who have timekeeping systems that record all employee worktime by the minute should not use a rounding policy at all, even a neutral one. See the ruling here.

Background

Home Depot used “Kronos,” an electronic timekeeping system, to record the exact minute that an employee clocked in or out during a shift, as well as for meal breaks. Home Depot then applied a quarter-hour rounding policy to the hourly employee’s total shift time. In March 2019, plaintiffs Delmer Camp and Andriana Correa filed a putative class action against Home Depot, alleging that this rounding system resulted in unpaid minimum and overtime wages. Home Depot moved for summary judgment on the grounds that its rounding policy was neutral on its face, neutral as applied, and otherwise lawful under the California Court of Appeal’s decision in See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 (2012). 

The trial court granted Home Depot’s motion for summary judgment, finding that its policy met the standards approved in See’s Candy as it was both neutral on its face and as applied. Camp appealed the trial court’s decision. Due to Home Depot’s rounding policy, Camp lost more than seven hours of worktime between March 2015 and October 2020, while another plaintiff conceded that the records showed she was actually overpaid as a result of Home Depot’s rounding policy, and her appeal was dismissed.

Decision

The Sixth Appellate District reversed the trial court’s summary judgment order. In reaching its decision, the court relied on language from two recent California Supreme Court decisions, Troester v. Starbucks Corp., 5 Cal. 5th 829 (2018) and Donohue v. AMN Services, LLC, 11 Cal. 5th 58 (2021) to find that employees must be paid for all time worked.  

The court also rejected Home Depot’s argument that the calculation of wages is “easier” with rounding time. The court held that there is “no provision in California law that privileges arithmetic simplicity over paying employees for all time worked.”

In sum, the court held that Home Depot’s rounding policy did not meet its burden to show there was no triable issue of material fact regarding Camp’s claims for unpaid wages because Home Depot did in fact track to the minute the exact time an employee worked, and those records did show that Camp was not paid for all time worked. Thus, if an employer can capture and has captured the exact amount of time an employee has worked during a shift, as Home Depot could, the employer must pay the employee for all time worked.

Further, the court acknowledged that its holding may call into question the validity of the See’s Candy holding permitting rounding policies neutral on their face and in application. In fact, the court specifically mentioned that the California Supreme Court has never decided the validity of the rounding standard articulated in See’s Candy, which was a decision issued by the Second District California Court of Appeal, thus creating a split in authority due to the conflicting approaches adopted by the Second and the Sixth Districts of the Court of Appeal. To that end, the Camp court invited the California Supreme Court to address the rounding standard articulated in See’s Candy and “ to review the issue of neutral time rounding by employers and to provide guidance on the propriety of time rounding by employers.”

Effect on Employers 

It remains to be seen whether the California Supreme Court takes the Camp court up on their invitation to address the rounding standard. In the meantime, employers whose timekeeping systems have the ability to record time clocked to the minute should consider eliminating the use of rounding policies altogether after the Camp decision. Although the decision leaves open the door for employers to use a neutral rounding policy if their timekeeping systems do not record time to the minute, those employers should explore the cost of purchasing a system or software that does record to the minute. We would recommend that employers check with their timekeeping systems providers to determine whether employee worktime is tracked by the minute.

Finally, the Camp decision leaves open the question of rounding policies as applied to wages when issuing employee paychecks.