California Employers May No Longer Be Permitted to Utilized Rounding Policies to for Employee Timekeeping Purposes to Pay Wages 

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November 4, 2022

Recently, in Camp v. Home Depot U.S.A., Inc., 2022 Cal. App. LEXIS 882, the Court of Appeal reversed the trial court’s order granting summary judgment for defendant Home Depot finding that plaintiff Camp presented a triable issue of material fact on for his unpaid wages where Home Depot’s rounding policy precluded plaintiff from being paid for of his hours worked. The appellate court stated, if an employer (as in this case) 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.

Based on the court’s ruling in Camp, employers should expect that the circumstances in which rounding policies, for the purpose of employee timekeeping, are permitted will likely be further limited going forward or possibly prohibited in completed as technology continues to advance. Find below a brief case summary of Camp v. Home Depot.

Camp v. Home Depot Case Summary

Facts
In Camp, plaintiffs Delmer Camp (Camp) and Adriana Correa (Correa) filed a putative class action for unpaid wages against Home Depot U.S.A., Inc. (Home Depot). Id. at 1. Plaintiffs alleged that Home Depot’s electronic timekeeping system capture each employee’s time worked down to the minute, but due to Home Depot’s quarter-hour rounding policy employees were not paid for their full time worked. Id. Home Depot implemented a rounding time policy that rounded an employee’s time either up or down to the nearest quarter hour, rather than using the actual time reported. Id. at 5.

Procedural History
Home Depot moved for summary judgment on plaintiffs’ complaint arguing that plaintiff Correa did not have standing to bring a claim for unpaid wages because she did not lose any wages due to Home Depot’s time keeping policy. Id. Regarding plaintiff Camp, Home Depot acknowledged that plaintiff Camp had loss a total of 470 minutes (7.83 hours) over the four and a half years he was employed with Home Depot because its rounding policy. Id. at 2. However, Home Depot still contested that it was entitled to summary judgement because its round policy was neutral on its face, neutral as applied, and otherwise lawful under See’s Candy. Id. The trial court granted Home Depot’s motion for summary judgment finding that Home Depot’s rounding policy met the standard provided in See’s Candy. Id. The trial court also observed that it was not free to disregard the binding appellate authority in See’s Candy and reach a different conclusion. Id. at 3.

On appeal, plaintiff Correa conceded that she was overpaid and could not state a claim for unpaid wages and the court dismissed her appeal as abandoned. Id. at 2. However, plaintiff Camp contend that California labor law and the holding of See’s Candy did not permit an employer to pay less than all time worked, and that Home Depot’s rounding policy is unlawful. Id. at 3. The Court of Appeal reviewed plaintiff Camp’s appeal de novo to determine whether trial court erred in its order granting Home Depot’s motion for summary judgment in respect to plaintiff Camp. Id. at 10.

Issue Presented
The issue present was whether the trial court’s order granting the Defendant Home Depot’s motion for summary judgment was proper against the Plaintiff Camp. Id. at 9. Whether there is a dispute of material fact as it relates to plaintiff Camp’s unpaid wages due to Home Depot’s rounding time timekeeping policy where it was able to capture and did capture all of plaintiff’s time worked yet did not pay plaintiff for all of his time worked. Id. at 9.

Discussion
The Court of Appeal considered three cases in making its judgment: (1) See’s Candy, (2) Troester, and (3) Donohue. The substantive rule that came out of See’s Candy was that a California employer is entitled to use a rounding policy if the rounding policy is fair and neutral on its face and it is used in 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. Id. at 16. The applicable rule from Troester is that the federal de minimis doctrine does not apply to California wage and hour claims. Id. at 18. The relevant rule that came out of Donohue was that an employer is prohibited from using a rounding policy for time keeping for meal periods. Id. at 26.

Analysis
Considering the court’s reasoning in the above respective cases, the appellate court analyzed plaintiff’s Camp’s unpaid wage claim finding that plaintiff presented a disputed issue of material fact. Id. at 27. The court stated that it reached this conclusion based on the following reasoning: (1) the California Supreme Court has stated that the Labor Code and the relevant wage order contemplate that employees will be paid for all work performed; (2) the California Supreme Court has explained that the regulatory scheme of relevant California statutes and wage orders is concerned with small things (like small increments of time); (3) the California Supreme Court stated that, absent convincing evidence of the IWC’s intent to adopt the federal standard for determining whether time is compensable under state law, the Court declined to import any federal standard by implication; and (4) the California Supreme Court appears to have called into question time rounding given the advancements in technology that enable employers to more easily and more precisely capture employee’s time worked. Id. at 27-30.

Home Depot argued that (1) the wage calculations are “easier” with rounded time and (2) the punch times captured by a timekeeping system may not accurately reflect an employee's work time. Id. at 31-32. However, the court was unpersuaded by Home Depot’s argument. Id.

Holding
The court held that in Home Depot’s reliance on its quarter-hour time rounding policy it failed to meet its burden to show that there is no triable issue of material fact regarding plaintiff Camp’s unpaid wages for all the time he worked. Id. at 34. The court stated that following Troester and Donohue, if an employer (as in this case) 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. Id.

Lastly, the court observed that it is well settled law that neutral time rounding is lawful under California law. Id. at 35. However, the California Supreme Court has never decided the validity of the rounding standard articulated in See’s Candy. Id. at 36. The court invited the California Supreme Court to decide the validity of the rounding standard articulated in See’s Candy where, in limited circumstances, the employer can capture and has captured all the minutes an employee has worked and then applies a quarter-hour rounding policy. Id. Additionally, the court invited the California Supreme Court to review the issue of neutral time rounding by employers and to provide guidance on the propriety of time rounding by employers, in view of the technological advances that now exist which help employers track time more precisely. Id.

We will continue to keep you updated on new developments. If you have any questions about rounding policies, contact McKague Rosasco LLP.