Sweet News On Rounding For California Employers: See's Candy Shops, Inc. v. Superior Court

In See's Candy Shops, Inc. v. Superior Court, the California Court of Appeals for the Fourth Appellate District explicitly held that in California employers are entitled to use a timekeeping policy that rounds employee punch in/out times to the nearest one-tenth of an hour (a "nearest-tenth rounding policy") if the rounding policy is "fair and neutral on its face" and "is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked." The court adopted the standard used by both the United States Department of Labor and the California Division of Labor Standards Enforcement, bringing "sweet" news to employers who use rounding policies.

Until recently, the future of employer rounding policies had been called into doubt after a San Diego Superior Court summarily dismissed two of See's key affirmative defenses in a certified class action challenging its rounding policy. See's, like many employers, used a timekeeping policy that rounds employee punch in/out times to the nearest one-tenth of an hour (a "nearest-tenth rounding policy"). The plaintiff, a former employee, successfully filed a summary adjudication motion challenging See's defenses that its nearest-tenth rounding policy was consistent with state and federal laws permitting rounding for the purposes of computing and paying wages and overtime and that it did not deny the plaintiff or class members full and accurate compensation. Not surprisingly this caused considerable heartburn for employers with rounding policies, especially those defending rounding class actions. Now employers can rest a little bit easier because the Fourth Appellate District has upheld the use of a nearest-tenth rounding policy in California if the policy is fair and neutral on its face and does not result in a failure to compensate employees for all of the time they have actually worked.

See's Timekeeping Policies

Two of See's timekeeping policies were at issue in the case – its nearest-tenth rounding policy and a grace period policy. See's rounding policy rounded time punches up or down to the nearest tenth of an hour (every six minutes beginning with the hour mark). For example, an employee who clocked in at 7:58 a.m. would be rounded up to 8:00 a.m., and an employee who clocked in at 8:02 a.m. would be rounded back to 8:00 a.m. See's also employed a grace period policy, which allowed employees to clock in up to 10 minutes before their scheduled start time, and clock out up to 10 minutes after their scheduled end time. Employees were forbidden from working during the grace period; rather it was time in which to socialize or use for personal activities. If an employee punched in during the grace period, and did not otherwise inform his or her manager that he or she was performing work during this time, the employee's pay was adjusted to the actual shift start/stop times. Generally, when the grace period policy applied rounding was not in effect because the time was adjusted to the actual shift start and stop times, usually whole hours. While the grace...