NEW CASE: California Court Approves Employer’s Rounding Practice

In a recently-decided case (Donohue v. AMN Services, LLC), a California appellate court found that an employer’s rounding of employee’s time to the nearest 10-minute increment did not violate California law because the practice did not disfavor employees.

In this case, the plaintiff was a non-exempt nurse recruiter who worked for a healthcare staffing company.  The recruiters, including the plaintiff, logged their time using a computer-based timekeeping system.  Despite the fact that the computer-based timekeeping system logged employees’ punches in real time, the company had a practice of rounding employees’ time to the nearest 10 minutes (e.g. all punch times between 7:55 a.m. and 8:04 a.m. would record as 8:00 a.m., and all punch times between 8:05 a.m. and 8:14 a.m. would record as 8:10 a.m.).  The plaintiff filed a class action lawsuit against the employer claiming that the company’s rounding practice violated California law.

The Court disagreed and found that the company’s practice did not violate California law because the rounding policy on the whole was neutral as to all affected employees and uniformly applied.

In making this finding the Court pointed out that rounding is permissible in California provided that the employer’s rounding practice 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.”  Under this standard, “an employer’s rounding policy is fair and neutral if on average, it favors neither overpayment nor underpayment; but such a policy is unacceptable if it systematically undercompensates employees because it encompasses only rounding down.”

Take home for employers

This case confirms that rounding is permissible in California – provided that it meets the above-stated standard.  If your company rounds employees’ time, it is strongly recommended that you routinely audit employee time records to verify that your company’s rounding practice meets the above standard.