Rounding Hours Worked Is OK if Done Correctly

This post is brought to you by.... See's Candies.  Mmmmm nuts and chews.And their workers still give out those free samples. 

It turns out that See's also can deliver a tasty precedent! From the Court of Appeal.

See's Candy uses a timekeeping software system, known as Kronos, to record its employee work hours. Employees are required to "punch" into the system (located in the back room of each See's Candy store) at the beginning and end of their shifts, as well as for lunch breaks. A Kronos punch shows the actual time (to the minute) when the employee punched into the system. During the relevant times, See's Candy calculated an employee's pay based on his or her Kronos punch times, subject to adjustment under two policies: (1) the nearest-tenth rounding policy; and (2) the grace period policy.
Under the nearest-tenth rounding policy, in and out punches are rounded (up or down) to the nearest tenth of an hour (every six minutes beginning with the hour mark). The Kronos time punches are thus rounded to the nearest three-minute mark. For example, if an employee clocks in at 7:58 a.m., the system rounds up the time to 8:00 a.m. If the employee clocks in at 8:02 a.m., the system rounds down the entry to 8:00 a.m.

So, those are the relevant facts. The trial court held that rounding is not allowed in California, given that California requires payment for all hours worked.  See's argued that the federal rules on rounding should apply, and that they were adopted by the California DLSE.

The Court of Appeal agreed with See's:
In the absence of controlling or conflicting California law, California courts generally look to federal regulations under the FLSA for guidance. (Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 903.) The policies underlying the federal regulation — recognizing that time-rounding is a practical method for calculating work time and can be a neutral calculation tool for providing full payment to employees — apply equally to the employee-protective policies embodied in California labor law. Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees. (See Gillings v. Time Warner Cable, LLC, supra, 2012 WL 1656937, at *5.

* * *

Relying on the DOL rounding standard, we have concluded that the rule in California is that an employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and "it 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." (29 C.F.R. § 785.48; see DLSE Manual, supra, §§ 47.1, 47.2.)

To emphasize - the employer will be responsible for ensuring the rounding policy does not unfairly favor the employer.  Over time, "rounding" should come out about even.  If not, the court left open the possibility that the payment system will be found to be illegal.

The case is See's v. Superior Court (Silva) and the opinion is here.