United States: California Wage And Hour Win For Employers: Rounding Policies And Timesheet Certifications

On December 10, 2018, a California Appellate Court published its decision in Donohue v. AMN Services, LLC, affirming class-wide summary judgment for the employer.  The court's decision in this wage and hour case presents some interesting take-aways for California employers in that it endorses the lawfulness of widespread timekeeping practices that class action attorneys often seek to challenge as unlawful.

First, a California court has again found the practice of implementing a "fair and neutral" rounding policy for employee timeclock entries to be lawful.  The court affirmed that a rounding policy is "fair and neutral" where "on average, it favors neither overpayment nor underpayment," irrespective of whether it involves an underpayment for certain individuals or certain periods of time.  The employer submitted an expert opinion that their practice of rounding employee punch times to the nearest ten-minute increment did not result in any failure to compensate the class as a whole for all time actually worked over the course of the class period, which demonstrated that the system complied with the spirit of the regulations requiring a system not be skewed against the employee.  The court even approved rounding of employees' clock in and clock out times for meal periods, even where the result of such a system was that an employee's meal period was deemed to last 30 minutes solely as a result of rounding the time entries (e.g., if he clocked out at 12:02 and clocked back in at 12:27, the rounding system would treat that as a 30 minute period).  While the plaintiff contended that rounding rules cannot apply to clock times for meal periods, the court held that there is no special exception for meal periods when it comes to the California rule permitting fair and neutral rounding of time entries to the nearest set increment.  Although the court did not endorse a per se rule that a rounding system will necessarily be deemed lawful if it rounds to the nearest set increment, it cited to a growing line of cases that have all found such "evenhanded" systems to be lawful even where there were individuals in a proposed class whose total work time was reduced as a result of rounding time entries.  It appears that plaintiffs will need to identify some systematic practice that causes a seemingly evenhanded system to instead be biased against the employees.

Second, in regards to the evidence the court would consider, the court rejected the plaintiff's declaration as inadmissible where she claimed she did not receive all of her rest and meal periods in contradiction of electronic certifications she made on her timesheets.  In fact, with each submitted timesheet, the plaintiff had certified that she was "provided the opportunity to take all meal breaks to which I was entitled, or, if not, I have reported on this timesheet that I was not provided the opportunity to take all such meal breaks."  The court viewed the plaintiff's later contradictory declaration as testimony inconsistent with a prior statement, which indicates the potential usefulness of such timesheet certifications.

Third, the court approved a timekeeping system that flagged late meal periods and asked the employee to confirm whether they had the opportunity to take a timely meal period or not, and no penalty pay would issue where the employee confirmed that they had the opportunity to take a timely meal period.  This has become a common practice among companies that want to build in a mechanism to pay for genuinely missed, short or delayed meal periods, but do not want to pay in cases where the missed, late or short period that resulted from the employee's own choice not to take a compliant meal period.  The court found that this practice was compliant with California law as set forth in the controlling case, Brinker Restaurant Corp. v. Superior Court.

Although it may not be the most conservative approach to implement every timekeeping element described in this system, this case provides powerful support in litigation if you have employed a similar system that is challenged as violating the Labor Code. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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