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May 2, 2016
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The Ninth Circuit Court of Appeals stated in Corbin v. Time Warner Entertainment Advance/Newhouse Partnership (“TWEAN”) that the federal rounding regulation for timekeeping, versus actual time worked, does not require employees to gain or break even over each pay period. Rather, the regulation is intended to calculate wages such that they average out over the long term. In Corbin, an employee argued that he had wrongfully been deducted minutes of compensable time as a result of the rounding system.
TWEAN used a time clock system that rounded non-exempt employee time stamps to the nearest quarter-hour. This rounding system potentially adds or subtracts minutes of paid working time. For example: a worker clocking in at 8:05 a.m. would be paid from 8:00 a.m. onward, gaining 5 minutes of paid time; a worker clocking out at 5:33 p.m. would be paid until 5:30 p.m., losing 3 minutes of paid time.
Corbin, an employee at a TWEAN call center, found that he lost an aggregate $15.02 in compensation over 13 months. Corbin sued, alleging in part that TWEAN’s rounding system violated the Fair Labor Standards Act (“FLSA”) and California wage and hour laws. The district court granted TWEAN’s motion for summary judgment; upon appeal, the Ninth Circuit affirmed the district court’s decision.
The Ninth Circuit noted that, as a matter of first impression, the federal rounding regulation does not require employees to gain or break even over every pay period, meaning it is possible that there would be particular weeks in which an employee comes out behind. TWEAN’s rounding policy was considered appropriately neutral, since it is applied consistently to all employee punches in the same way and, as applied to Corbin, sometimes gave and sometimes deducted work minutes.
In general, rounding practices are allowed, so long as they are consistently applied and neither favor overpayment nor underpayment of compensable time.
- If using rounding in your timekeeping system, ensure that the rounding policy is neutral on its face and as applied to employees.
- Contact ManagEase at (888) 230-3231 for questions about, or assistance in amending timekeeping policies, if needed.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
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