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FEBRUARY 16, 2023


VOLUME XIII, NUMBER 47


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FEBRUARY 15, 2023

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CALIFORNIA WAGE AND HOUR ISSUES FOR EMPLOYERS TO WATCH IN 2023: IS MY
TIME-ROUNDING SYSTEM STILL COMPLIANT? (US)

Wednesday, December 14, 2022

Virtually every employer in California has repeated the mantra of “no
off-the-clock work” to its employees. But what about those minutes that are
“on-the-clock” but remain unpaid because of rounding practices? Since 2012, when
the California appellate court decided See’s Candy Shops, Inc. v. Superior
Court, 210 Cal. App. 4th 889 (2012), employers have presumed that so long as
their rounding policy was neutral on its face (meaning it rounds time both up
and down), and neutral as applied such that over a period of time employees were
fairly compensated for all time actually worked, then the system was lawful.

This conclusion was called into question in the recent case of Camp v. Home
Depot USA, Inc., No. H049033, 2022 WL 13874360 (Cal. Ct. App., Oct. 24, 2022).
Home Depot used a time-tracking system that captured each minute worked, but
nonetheless applied a quarter-hour rounding system. Mr. Camp and his
co-plaintiff, Adrianna Correa, filed a putative class action for unpaid wages,
claiming that the rounding policy resulted in working time that was not paid.
However, the statistics presented by the parties in the trial court showed that
in the aggregate, employees in the class sample were paid for 5,656 hours more
than if Home Depot did not round time. The trial court found the practice
facially neutral and neutral as applied, and entered summary judgment for Home
Depot based on the test articulated in the See’s case.

Plaintiffs appealed. Notwithstanding the aggregate numbers, Plaintiff Camp had
lost a total of approximately eight hours of pay over a more than four-year
period as a result of the rounding policy. (Ms. Correa had come out ahead and
had no uncompensated time as a result of the rounding policy, so she abandoned
her claim for unpaid wages on appeal.) In analyzing the issues, the Court of
Appeal began by noting that California wage orders and Labor Code 510
contemplate that employees will be paid for all work performed. The California
Supreme Court affirmed this principle in Troester v. Starbucks Corp., 5 Cal. 5th
829 (2018), holding that the “de minimis” rule under the federal Fair Labor
Standards Act did not apply in California in cases where employees were required
to perform regularly recurring activities without compensation, noting that
“small things” add up, and make a difference to many people who work for hourly
wages. More recently, in Donohue v. AMN Services, LLC, 11 Cal. 5th 58 (2021),
the California Supreme Court concluded that rounding is not appropriate in the
meal period context. In Donohue, the court noted that the electronic timekeeping
system at issue in that case “actually had to take the extra step of converting
the unrounded time punches to rounded ones” and stated that “as technology
continues to evolve, the practical advantages of rounding may diminish further.”

Based on this precedent, the Camp court reversed the trial court decision, and
concluded that “if an employer can capture and has captured the exact amount of
time an employee has worked during a shift, the employer must pay the employee
for ‘all the time’ worked.” Having concluded this, the Camp court nonetheless
recognized past guidance from the California Supreme Court indicating that in
circumstances involving “the practical administrative difficulty of recording
small amounts of time for payroll purposes,” and where “neither a restructuring
of work nor a technological fix is practical, it may be possible to reasonably
estimate worktime,” for example through a fair rounding policy. In view of the
technological advances evident in Home Depot’s system, the Court of Appeal
explicitly invited the California Supreme Court to weigh in on this issue, and a
petition for review has already been filed. In the meantime, unless Camp is
reversed, all California employers should be wary of any pay-rounding using time
clocks accurate to the minute. Stay tuned for further developments in 2023.

© Copyright 2023 Squire Patton Boggs (US) LLPNational Law Review, Volume XII,
Number 348

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About this Author

Karen E. Wentzel
Of Counsel

Karen Wentzel has more than 20 years of experience representing clients in a
wide variety of business disputes, with special expertise in the laws governing
sexual harassment, sex, race, age and disability discrimination, wrongful
discharge, employee raiding and misappropriation of trade secrets, and stock
options. She regularly appears in both state and federal courts, and in private
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Karen regularly advises clients on the avoidance of litigation on wage and hour
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sexual harassment and retaliation.

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Act, Michael has extensive litigation experience with various issues arising
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Michael’s recent experience includes representing a national distribution and
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