Employers in California and other states have used time-rounding practices for many decades based on principles announced by the U.S. Department of Labor (“DOL”), the California Division of Labor Standards Enforcement (“DLSE”), and state and federal court decisions. Although different kinds of time-rounding practices exist, the most common practice involves rounding time entries recorded on employees’ time records to the nearest five minutes or the nearest one-tenth or one-quarter of an hour. Such practices have normally been found lawful under California and federal law, provided they averaged out over a period of time, did not result in a failure to compensate employees properly for all time actually worked, and met additional standards.
More than 10 years ago, a leading California case allowing time rounding based on these principles was published in See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 (2012). Numerous subsequent opinions construing California and federal law reached the same conclusion. (The topic is examined in Section 7.18 of the Wage and Hour Manual for California Employers, 26th Edition, by Attorney Richard J. Simmons of Sheppard Mullin.)
A more recent California Court of Appeal decision raises questions about these earlier decisions and the validity of time-rounding practices under California law. This new case should prompt employers to reevaluate time-rounding policies and practices and the risks they may present.
1. The Camp v. Home Depot Decision
In 2022, a California Court of Appeal disagreed with earlier decisions in finding that an employer violated California law in a case where the employer rounded total time for each workday, Camp v. Home Depot, 84 Cal. App. 5th 638 (2022). The Camp decision is fundamentally at odds with the principles followed for decades by the U.S. DOL and California DLSE and many state and federal cases that had construed California law.
The California Supreme Court has agreed to review the Camp decision. If the Supreme Court determines that the court of appeal correctly decided the case, it could cause a seismic shift in California law that leads to a new wave of class action, PAGA and single plaintiff lawsuits. Worse yet, an adverse decision by the Supreme Court could be applied retroactively.
2. The Briefing Schedule
The Supreme Court has established a briefing schedule under which the parties are currently required to submit briefs between June 1 and the end of July. Amicus briefs will be due shortly thereafter. A hearing date has not yet been scheduled. Richard Simmons and Tyler Johnson of Sheppard Mullin have been retained to file employer-side amicus briefs in support of Home Depot. The authors of the ALERT are therefore able to offer a unique perspective on the case and will update readers regarding important developments.
3. Employers Should Consider Their Options While The Case Is Pending
Many practitioners and employers are skeptical about the possible outcomes the Supreme Court could reach in the Camp decision given its track record of reaching decisions in employment cases that are adverse to employer interests. Undoubtedly, some anticipate that the Supreme Court’s decision is a “forgone conclusion” and that it will find all or most kinds of time rounding impermissible under California law, even if it is lawful under federal law, the Fair Labor Standards Act. The possibility of such an outcome certainly exists. Thus, the Supreme Court might simply outlaw rounding in any form, regardless of whether it involves total-time rounding at the end of each day (like the practice found impermissible in Camp) or a system where each time punch is separately rounded. It might also determine that its decision should apply retroactively. Employers who believe this is likely or simply wish to limit their risk may consider ending their rounding practices as soon as possible, if they have not already ended them.
a. Weighing Possible Outcomes
Despite the possibility that the Supreme Court could issue a bad decision for employers, there are other possible outcomes. Under a more refined analysis, employers may wish to determine first whether they utilize rounding practices and, if so, what system is used. For instance, they can ascertain whether they round all time entries, including meal period punches, or just in and out punches at the start and end of a shift.
Rounding meal period punches is particularly risky in light of Donohue v. AMN, 11 Cal. 5th 58 (2012), but even that practice requires an analysis of an employer’s meal period policies. For example, rounding time when employers provide 30-minute meal periods is considerably more risky than rounding time for 60-minute meal periods, i.e., because employees generally receive over 30 minutes even after rounding. And, some employers lawfully do not record meal periods at all because of the exemption that exists in the Wage Orders where an employer’s operations cease entirely during meal periods, such as when the power is shut off in a work area or a bell system is used to signal the start and end of a meal period.
Employers should also be mindful that the Supreme Court could surprise everyone and either affirm the permissibility of some types of time rounding under specific circumstances. Remember, while many argue that California has no de minimis doctrine because it rejected the federal standards in Troester v. Starbucks Corp., 5 Cal. 5th 829 (2018), Justice Krueger articulated standards that resemble a refined California de minimis standard that is more narrow than the federal standards. While many think it is unlikely, something of this nature could be cobbled together in Camp for time rounding so it is permitted, but only if tightly written conditions are met. Other practitioners may believe the Supreme Court will side with the See’s Candy Shop decision and affirm the permissibility of rounding practices that meet the standards set forth in that case.
b. Consult Your Attorneys
Some employers may simply want a recommendation from their attorneys of a “best and safest practice.” If so, it can be provided. Others will want a more in-depth discussion. Practitioners must be prepared to outline the potential outcomes in Camp, assess the employer’s level of risk tolerance and concerns about retroactivity of any decision, and ask how and why each employer rounds. For instance, did the employer implement rounding because it never considered alternatives to rounding, because of a study or economic analysis it performed, or for some other reason? These motivations may inform an employer’s decision of what steps are best in light of the upcoming decision in Camp and the possible outcomes that can occur. Suffice it to say that it is unlikely that all employers will choose the same path in addressing Camp’s possible outcomes. Employers are encouraged to consult experienced employment attorneys to consider their risks and options.
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About The Author
Richard J. Simmons is a Partner in the law firm of Sheppard, Mullin, Richter & Hampton LLP in Los Angeles. He represents employers in various employment law matters involving litigation throughout the country and general advice regarding state and federal wage and hour laws, employment discrimination, wrongful discharge, employee discipline and termination, employee benefits, affirmative action, union representation proceedings, and arbitrations. Mr. Simmons received his B.A., summa cum laude, from the University of Massachusetts, where he was a Commonwealth Scholar and graduated in the Phi Kappa Phi Honor Society. He received his J.D. from Berkeley Law at the University of California at Berkeley where he was the Editor-in-Chief of the Industrial Relations Law Journal, now the Berkeley Journal of Employment and Labor Law.
Mr. Simmons argued the only case before the California Supreme Court that produced a victory for employers and business in 2018. He was recently recognized as the Labor and Employment Attorney of the Year by the Los Angeles Business Journal and was inducted into the Employment Lawyers Hall of Fame. He has lectured nationally on wage and hour, employment discrimination, wrongful termination, and other employment and labor relations matters. He is a member of the National Advisory Board to the Berkeley Journal of Employment and Labor Law, published by Berkeley Law at the University of California at Berkeley. He was also appointed by the California Industrial Welfare Commission as a member of three Minimum Wage Boards for the State of California.