Time Clock Rounding Rules in California
Rounding hourly employee time is a common practice in the US as a way to streamline time tracking and simplify payroll and billing.
Still, time clock rounding rules in California have seen their share of legal twists and turns, with significant repercussions for employers, making it a topic of considerable importance.
For California employers, the message is crystal clear: even tiny increments of unpaid work time can have significant legal repercussions.
So, if you’re running a business in California, here’s your definitive guide to understanding California rounding rules in 2023 and improving practices that could otherwise land you in legal and financial hot waters.
Time Clock Rounding Rules: The Foundation
Before we dive into California’s set of evolving rules, it’s essential to understand what federal law, specifically the Fair Labor Standards Act (FLSA), says about time clock rounding.
Here are a few key points related to the practice:
- Five-Minute Rule. According to the FLSA, employers can round employees’ clock-in and clock-out times to the closest five or ten minutes or even to the nearest quarter hour.
- The 1-7, 8-14 Rule. If an employee’s time falls between 1-7 minutes, it can be rounded down. However, if it’s between 8 and 14 minutes, employers must round it up, counting it as a quarter-hour of work.
- Higher Increments Caution. Some employers may consider rounding to larger chunks of time, like the nearest half-hour. Still, this practice is not generally advised as it could violate the law.
- No Shortchanging. Time rounding should never result in neglecting to count all the hours an employee has actually worked over a given timeframe.
Following federal law, employers must apply a neutral rounding policy uniformly and fairly.
Why Is Rounding Time an Issue?
Time rounding isn’t merely an administrative detail—it can have real financial and legal implications for employers and employees.
Risk of Underpayment
Employers who systematically round down employees’ work hours risk underpaying employees and violating the FLSA.
When an employer rounds down clock-in and clock-out times, even by seamlessly small increments, these minutes can accumulate into a significant amount of unpaid wages. This is particularly significant for employees who frequently work beyond their regular hours or have irregular schedules.
Impact on Minimum Wage Compliance
The time-rounding practices can also have implications for meeting minimum wage standards. If employers round employee time down, this could cause the employee’s wage to fall below the state-mandated minimum requirements.
Overtime Calculations
Moreover, time rounding can affect overtime calculations. An employer might round down an employee’s working time, making it appear that the worker did not qualify for overtime pay when, in fact, they did.
What Are the Rounding Rules in California?
California has followed FLSA time rounding practices for a long time.
Initially, the California Supreme Court gave the nod to time rounding in 2012 with the case of See’s Candy Shops, Inc. v. Superior Court.
The verdict in this case was clear: employers could use time rounding policies if they were “fair and neutral,” and employees are fairly compensated for all the time they’ve worked.
Is Time Clock Rounding Legal in California?
Time clock rounding remains legal in California under specific conditions. However, recent rulings have imposed more constraints on the practice, and the future of the practice is currently uncertain.
In the case of Troester v. Starbucks Corp., for example, an employee took Starbucks to court over unpaid time spent on tasks after clocking out.
Initially, the district court sided with Starbucks, applying the federal Fair Labor Standards Act’s ‘de minimis’ rule, which essentially allows minimal amounts of time to be ignored when calculating work hours.
But, the tides turned when the case was appealed. The California Supreme Court took a stance that the state of California looks unfavorably at the FLSA de minimis doctrine.
According to the state’s Labor Code, every single minute an employee works must be compensated, so no amount of ‘off-the-clock’ work should go unpaid.
How About Rounding Breaks in California?
In the 2021 California Supreme Court ruled in the case of Donohue v. AMN Services, LLC, that employers cannot round meal break times to 30 minutes if the employee did not actually take a 30-minute break.
In the Donohue case, the employer in question—a healthcare staffing agency—used a timekeeping system that rounded employees’ meal break times to the nearest 10-minute mark.
So, if an employee clocked out for lunch at 11:03 a.m., the system would round down to 11:00 a.m. If they clocked back in at 11:24 a.m., the system would round it up to 11:30 a.m. and record the meal break as a full 30-minute break—even though it lasted only 21 minutes.
The court ruled that this kind of time clock rounding led to many employees not getting their complete 30-minute meal breaks. Moreover, they would only get the extra premium if they proactively claimed their meal break was missed, cut short, or late.
According to the court’s opinion, California’s meal period requirements are established to prevent even minor breaches of employees’ meal periods. So, rounding employees’ meal period time punches for even the smallest amount violates California law.
The Game Changer: California Rounding Rules 2023
The state’s time-rounding landscape was further changed in 2023 when the California Court of Appeal ruled in the case of Camp v. Home Depot USA, Inc.
At first, the trial court granted summary judgment in favor of the employer, Home Depot, based on the previous See’s Candy Shop decision.
However, the California Court of Appeal changed the initial ruling, stating that if employers can and do record the precise time an employee has worked, they must pay for every last minute.
In this case, the Appeal Court’s decision was impacted by the fact that the employer was using an electronic timekeeping system that could and did capture exact time but chose time-rounding regardless of the fact. Using such a practice, the employers deprived the employee of nearly eight hours of pay in the aggregate.
Even though the court did not ban time-rounding practices, it challenged See’s Candy’s decision and invited the California Supreme Court to decide its viability.
Though the Supreme Court’s decision isn’t likely to be issued in 2023, it is imminent for California employers to review their time-rounding policies.
Complying with California Rounding Rules in 2023: What Should Employers Do?
Now that we’ve covered all the bases let’s move on to the more practical grounds and discover how employers can best improve their practices and avoid harmful consequences.
1. Review Time Rounding Policies
California employers who use time rounding policies should review them to ensure they comply with the California wage law and the latest developments in this area.
They must ensure that their time rounding policies are fair and neutral and do not lead to underpaying employees.
2. Use an Accurate Time-Tracking System
Even if they keep their time-rounding practices, employers should adopt a modern tracking system that can track employee time accurately to the minute.
Such a solution can help employers ensure that employees are paid for all the time that they actually spend working. It will also ensure compliance with California law regarding accurate record keeping, enabling them to compare the actual time an employee spent working vs. hours compensated on the wage statements.
3. Track Employees’ Meals and Rest Breaks Separately
As we’ve concluded above, time-rounding is no longer an option when tracking employees’ meal breaks and should be discontinued immediately.
Fortunately, some solid break-tracking software solutions for employees in California are available at the market that let you track and verify that employees have taken their breaks according to the law.
4. Stay Up to Date with Legislation Changes
California remains one of the most employee-friendly states in the U.S. With the changes seen in the last decade, one shouldn’t be surprised if time-rounding practices become a thing of the past.
Employers should monitor the further developments in the Camp v. Home Depot USA, Inc. case and be prepared to update or ditch their time rounding system if necessary.
How Can Timeero Help Me Keep Up With Time Clock Rounding Rules in California?
So, besides understanding time clock rounding rules in California and ditching or reviewing time-rounding policies, you need accurate and trustworthy software to support your everyday operations.
This is where Timeero comes in, a reliable tool that tracks your employees’ times up to a minute and provides you with compliant reports.
So, how exactly can Timeero benefit California businesses?
Track Employee Time, Overtime, and Double Time
Timeero is a time-tracking system that precisely tracks your employees’ working hours by clocking in and out using a mobile device or web application.
The mobile app works on Android and iOS devices. It is easy for your employees to set up and use, even on the fly or in areas with low or no internet connection. You can set up reminders and notifications to minimize the odds of employees forgetting to clock in or out from work.
This way, you can be sure no time entries are lost, and your employees will be compensated for each minute they’ve put in.
Considering the specifics of California overtime law, Timeero includes predefined settings for tracking employees’ overtime hours and their double-time.
Using Timeero, you can rest assured that your employees’ working time is captured, regardless of whether they have regular, overtime, or double-time hours.
For smooth and accurate reimbursement, you just need to transfer Timeero’s data to your payroll software using one of Timeero’s integrations, CSV or PDF file.
Track and Attest Employee Breaks
Besides tracking employees’ work hours up to the minute, Timeero’s California Breaks Tracker feature ensures your business complies with California meal and rest break requirements with no time rounding.
In the company settings, you just need to choose California break policy and assign it to your employees. Once you do, each employee assigned to this policy must complete and submit the Daily Sign-off form before they punch out of work.
By answering the questions in the form, they will attest to using their breaks and state the reason for potential non-compliance.
If an employee is not compliant, you will be immediately alerted so that you act accordingly and include the premium pay on the next paycheck.
Check out our piece on California Break Policy for more information on how to create it, or download a template you can tailor to your business needs.
Safeguard Your Company
Besides protecting your employees and ensuring your business compliance with California employment laws, Timeero safeguards your company in many other ways.
As the Timeero app comes with GPS and mileage tracking capabilities, you can also track other important information, such as your field employees’ whereabouts, routes, and mileage during their working hours.
With such a system, you can easily determine how your employees spend their working hours and ensure they’re where they’re supposed to be, working on their assigned jobs, and improve their accountability.
All this is done in a manner that complies with California GPS tracking law without invading employee privacy, as the app only tracks GPS locations during their shifts.
You can read more about how Timeero can benefit your business by checking out our Timeero review.
California Rounding Rules 2023: Key Takeaways
It seems that the clock is ticking out for California rounding rules.
Here are the main points we’ve learned so far about time clock rounding rules in California:
- Time-rounding policies are (still) allowed in California, but they have to be fair and neutral. They should not result in employees being paid less than what they actually worked in a given period of time.
- Employers who use time rounding in California must also keep accurate records of employees’ hours and provide regular wage statements. The wage statements should show the total hours worked as closely as possible. Any difference due to time rounding should be small and not favor the employer.
- The California Supreme Court has rejected the FLSA’s de minimis doctrine for wage and hour claims. This means employers cannot avoid paying employees for small amounts of time that are hard to track or record, even in time-rounding cases.
- Time rounding is not allowed for tracking and recording meal breaks in California. Following California break laws, employees must be given a full 30-minute uninterrupted meal break for every five hours of work.
While time rounding practices might have had their benefits historically, they are becoming obsolete with the advancement of technology.
And as California’s Court of Appeal noted in its 2023 Camp decision - the practical advantages of rounding policies may diminish further.
Now, it’s on the Supreme Court to have a final say.
Disclaimer: Time clock rounding rules in California are a complex legal issue. The final guidance for California employers will be provided by the California Supreme Court. Before implementing time clock rounding in California, always seek legal advice or consult an HR professional to ensure your practices comply with all applicable laws.
