California Court Of Appeal Upholds Company's Rounding Practices

Many California employers round employees' clock-in and clock-out times to the closest quarter hour, tenth of an hour, or five-minute interval. This practice is commonly referred to as "rounding." On June 25, 2018, California's Second District Court of Appeal upheld an employer's rounding system in AHMC Healthcare, Inc. v. Superior Court of Los Angeles County, No. B285655 (June 25, 2018). The decision reaffirms the Ninth Circuit Court of Appeals' 2016 ruling on the subject and expands on the criteria used to evaluate whether a rounding policy is neutral in practice, and thus lawful.

Background

AHMC Healthcare rounds employees' clock-in and clock-out times to the closest quarter hour. For example, if an employee clocks in at 6:53 a.m. or 7:07 a.m., he or she is paid as if he or she clocked in at 7:00 a.m.

A statistical study of two AHMC Healthcare locations revealed that the employer's rounding practices resulted in the addition of 1,378 hours of compensable time over the course of 4 years at its San Gabriel location, and the addition of 3,875 hours of compensable time over the course of 4 years at its Anaheim location. The study also found that, due to the rounding policy, certain employees were paid less than they would have been paid if AHMC Healthcare calculated wages based on employees' exact clock-in and clock-out times. In fact, at the Anaheim location, 52.1 percent of the workforce lost time, with an average reduction of 2.33 minutes per shift.

Two affected employees, Emilio Letona and Jacquelyn Abeyta, lost an average of .86 of a minute per shift and 1.85 minutes per shift, respectively, due to the rounding policy. They sued AHMC Healthcare on behalf of themselves and other similarly situated employees, arguing that "a rounding policy that resulted in any loss to any employee, no matter how minimal, violates California employment law."

The Court of Appeal's Analysis

California's Second District Court of Appeal found that AHMC Healthcare's rounding practices were in compliance with California law, as they were neutral on their face as well as in practice. The employer's rounding system was facially neutral because all time punches were rounded systematically to the nearest quarter-hour without an eye towards whether the employer or employee benefitted from the rounding. It was also neutral in practice, as evidenced by the statistical study's results, which found that although certain employees were undercompensated, the employer...