California: Rounding Time is OUT!!!

In Donohue v. AMN Services, LLC, the California Supreme Court said that rounding timekeeping practices cannot be used for purposes of applying meal period premiums. Interestingly, the Court did not say that rounding in general was prohibited, but the ruling essentially makes rounding obsolete.

There, the employer had a neutral rounding policy to the nearest ten-minute increment. While the Court acknowledged that rounding was not prohibited by Wage Order 4, the Court looked at the impact of rounding on correctly assessing the one-hour meal premium for either taking less than an uninterrupted 30-minute meal period or failing to take a meal period by the fifth hour of work. The court gave the example that time punches at 11:02 am and 11:25 am would round to 11:00 am and 11:30 am, making it appear as though a full 30-minute meal period was taken. Similarly, another offered example showed an employee clocking in at 6:59 am and taking lunch at 12:04 pm; although the times would round to 7:00 am and 12:00 pm, the period worked would actually be over the fifth hour threshold.

The Court said that employees were actually owed meal premiums that were not being caught by the timekeeping system because of the rounding function. “When the actual times that an employee must work during a day reveal a meal period violation, the violation cannot be papered over by rounding.” The Court further questioned whether rounding should be used at all. “As technology continues to evolve, the practical advantages of rounding policies may diminish further.”

What do employers do from here? Best practice would be to convert from rounding to straight timekeeping practices. While working on a transition, be sure to monitor all time stamps for potential premiums owed to employees. If maintaining a rounding policy, employers will still need to manually review all time stamps for potential meal premiums, adding an extra step to the payroll process.

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