Another Nail in the Coffin for Employee Time Rounding in California

Many employers simplify their payroll system by rounding employee time punches to the nearest set increment, typically one quarter hour. The traditional rule under federal and California law was that rounding of an employee’s time was permitted so long as the employer rounded time in a neutral manner that did not result in a net loss of time worked. However, there has been a recent trend of California courts chipping away at this rule.

The California Fourth District Court of Appeal continued this trend in a recently published opinion, Nicole Woodworth v. Loma Linda University Medical Center. Woodworth was a registered nurse at Loma Linda University Medical Center from December 2011 to June 2014. The medical center utilized a computer-based system which recorded punches and rounded all employee time down to the nearest tenth of an hour. Woodworth filed a lawsuit alleging various wage-and-hour claims including failure to pay for all time worked because of rounding. The trial court dismissed the claim, but the appellate court disagreed.

During the litigation, the medical center hired an economist who analyzed all employees’ time and payroll records, concluding that 51.4 percent received compensation for more time than they worked while 47.4 percent were underpaid. In opposition, Woodworth hired a statistician who analyzed the same data and concluded that 67.6 percent of employees who worked 12-hour shifts were underpaid because the rounding system did not account for overtime and double time pay.

In holding that Woodworth could proceed on her rounding claim, the court noted that advances in technology have undermined the rationale for allowing rounding. Specifically, most modern timekeeping systems can track employee punches with greater exactness, mitigating the need to round. For many such systems, it is now an extra step for the computer to round the time worked because it already calculates the exact time.

This case is only the most recent example of an appellate court criticizing or ignoring the general rule on rounding. In fact, the court acknowledges that its decision contradicts other appellate opinions on this issue, but it proceeds regardless. Employers should be wary when implementing a timekeeping system that rounds time. Whether such a system is legal may come down to the appellate court district the employer operates, and it may only be a matter of time before California kills rounding altogether.

A copy of the case can be found here.

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