NEW CASE: Explaining Compensable Time in California

In a recent case (Sali v. Corona Regional Medical Center), the Ninth Circuit Court of Appeals explained what constituted “compensable working time” in California – helping to clarify a historically “murky” area of California wage and hour law.

In this case, the plaintiffs alleged that their employer’s rounding-time policy resulted in a systematic underpayment of compensable time worked by the RNs. Specifically, they claimed that “the time records are not a reliable indicator of the time RNs actually spent working because the RNs frequently clock-in for work and then perform non-compensable activities; such as waiting in the break room, getting coffee, or chatting with their co-workers, until the start of their scheduled shift.”

The Ninth Circuit recognized that a rounding-time policy is permissible under the California law providing it has been determined; “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 actually worked.” If the policy remains fair and neutral on average and does not benefit the employer a rounding-time policy is permissible in California.

In this case, the courts did determine two categories for compensable time.

  • the time when an employee is “under the control” of the employer, whether or not the employee is actually engaging in work activities, and
  • the time when an employee “is suffered or permitted to work, whether or not required to do so.”

It was determined that the employer misinterpreted the wording “actually worked” to mean the time employees were engaged in work related activities.

According to the redefined standards, compensable time is when an employee is suffered or permitted to work, whether or not required to do so and anyone under the control of the employer regardless if the employee is actually working.

For example, compensable time is when an employee is working, but is not subject to the employer’s control; such as when an employee works unauthorized overtime.

Another example would be is when the employee is required to stay on the company’s premises while on break or when an employee restricted from their own personal activities.

Take Home for Employers

It is recommended to conduct audits on rounding-time policies on a regular basis to ensure the policy remains neutral. Employers should consider changing policies to a smaller rounding interval system, perhaps to five-minutes to create less time in question or if possible, eliminate rounding-time polices all together.

Just as a reminder, in another recent case (Troester v. Starbucks Corp.) the California Supreme Court had ruled that the federal de minimis doctrine does not apply in California. In short, the Court held that a California employer that requires its employees to work minutes off the clock on a regular basis or as a regular feature of the job may not escape the obligation to pay employees for that time by invoking the de minimis doctrine.