What Employers Should Know About Time Rounding In California

If you own a business and have employees in California, you likely already know that you are required to pay non-exempt employees at least the minimum wage in California for hours worked, and you are required to pay non-exempt employees overtime pay at the rate of 1.5 times the employee’s regular rate of pay. The statewide minimum wage increased to $15.50 per hour in January 2023, regardless of the number of workers you currently employ. In calculating an employee’s pay, you might engage in a practice known as time rounding. Time rounding is often done by employers to avoid complications involved in calculating pay for a small number of minutes or even seconds worked.

In order to make accounting easier, employers might engage in “rounding,” or rounding a non-exempt employee’s hours. This practice is lawful in certain circumstances but not in all circumstances. What do you need to know about time rounding as a California employer?

Time Rounding Policy Must Be Neutral 

First, if you have a time rounding policy at your business, the policy must be neutral and fair. In other words, it cannot unfairly impact an employee on a regular basis while benefiting you. Accordingly, the policy must be that you round time to a particular amount (we will explain what amounts might be lawfully rounded below) whether the rounding benefits you or benefits the employee. For example, if an employee works for 5.09 hours, the employee must be paid for 5.1 hours if you are going to round. Likewise, if the employee works for 4.99 hours, the employee must be paid for 5 hours if you are going to round.

Time Rounding Cannot Result in Underpayment Over Time 

Any time-rounding policy your business uses cannot “result, over a period of time, in failure to compensate employees for all of the time they have worked,” according to the court in See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 (2012).

Indeed, a California court recently clarified that non-exempt employees in the state must be paid for all of the time they have worked and cannot routinely round down such that the employee is denied pay over time, even if the time appears minimal. Accordingly, employers cannot require employees to work even for a short time off the clock with the intention of rounding down. In the case Troester v. Starbucks Corp., 5 Cal. 5th 829 (2018), the court explained that, over time, even very small amounts of time can add up. The court discussed how that plaintiff was “seeking payment for 12 hours and 50 minutes of compensable work over a 17-month period, which amounts to $102.67 at a wage of $8 per hour.” In that case, the court emphasized that the total unpaid amount was “enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares.”

The Troester case is also important because it makes clear that employers cannot under pay wages over time because of the difficulty involved in tracking very small increments of work time. Additional cases on the issue of rounding are currently pending. Look out for future blogs on this issue.

Contact an Employment Lawyer in California 

If you have any questions about your obligations as an employer concerning pay and time rounding, you should seek advice from an employment law attorney for employers at Sloat Law Group. Our firm serves employers in Riverside County, Cathedral City, Coachella and Desert Hot Springs.

Sources:

dir.ca.gov/dlse/faq_minimumwage.htm

casetext.com/case/sees-candy-shops-1

casetext.com/case/troester-v-starbucks-corp-5