Strictly Business

Thursday, Mar 21 2013 12:00 PM

ROBIN PAGGI: Court on employer's side on timecard rounding

BY ROBIN PAGGI Contributing columnist

"Time is on my side," sang the Rolling Stones in 1964. Fast forward to 2013, when a decision by the California Supreme Court demonstrated that the court is actually on the employer's side when it comes to time rounding.

Employers with hourly workers frequently use a time rounding system, such as rounding up or down to the nearest tenth of an hour, when calculating the number of hours worked by their employees. For example, if an employee clocks in at 7:58 a.m., the time is rounded up to 8 a.m., and if the employee clocks in at 8:02 a.m,, the time is rounded down to 8 a.m.

In October 2009, former See's Candy Shops employee Pamela Silva brought a wage-and-hour class action complaint against the company alleging, among other things, that the company's time rounding policy caused her to be underpaid. According to court documents on www.jdsupra.com, Silva argued that the time rounding policy was unlawful because "there is no California statutory or case authority allowing See's Candy to use a rounding policy..."

Silva was correct -- there was no state law or court ruling in California that addressed the legality of rounding time. As a result, California courts generally looked to the federal government for guidance in this area. Specifically, the Fair Labor Standards Act, which permits employers to use a time rounding system as long as it "is used in such a manner that it will not result, over a period of time, in failure to compensate employees properly for all the time they have actually worked."

In October 2012, the Fourth District Appellate Court ruled in the candy company's favor, stating that California employers are entitled to use rounding policies if the policy "is fair and neutral on its face." Silva then took the case to the California Supreme Court who declined to review the lower court's ruling, thereby letting the decision stand.

While this is a small victory for employers who use rounding policies, be mindful that the court didn't say that all rounding policies are lawful -- just those that are neutral and fair to the employee. (An example of an unfair policy is one in which time is always rounded down). Additionally, a facially "fair" policy might in fact be unfair if over a period of time (in hindsight) it more frequently benefits the employer.

So, if you are an employer who rounds time, take a look at your system to ensure it properly compensates employees for time worked over a period of time. Because, as Ben Franklin said, "Time is money," and, you don't want an unfair calculation of time to end up costing you money.

-- Robin Paggi is the training coordinator at Worklogic HR Legal Solutions. She can be reached at rpaggi@worklogiclegal.com. These are her opinions, not necessarily those of The Californian.

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