November 16, 2012
See’s Candy Shops, Inc. v. Superior Court (Oct. 29, 2012) ___ Cal.Rptr.3d ___, 2012 WL 5305729, – Employer Can Round Time To Nearest Tenth of An Hour
Labor Code section 204 states (in part):
“(a) All wages, … earned by any person in any employment are due and payable twice during each calendar month, on days designated in advance by the employer as the regular paydays.”
See’s Candy Shops, Inc. uses a timecard system that rounds employee time to the nearest tenth of an hour. See’s rounding policy rounded time punches up or down to the nearest tenth of an hour so that an employee clocking in at 9:58 a.m. would be recorded as arriving at 10:00 a.m., and an employee clocking in at 8:02 a.m. would be rounded back to 8:00 a.m. See’s called an expert at trial who found that the up or down rounding was unbiased mathematically, and it actually resulted in a net gain for 60% of the class and a net loss for 33%.
Question: Does a rounding policy like See’s Candy Shops, Inc.’s (which can short an employee by 6 minutes per day) violate Labor Code § 204?
Holding: An employer can implement a policy rounding employee clock-ins and –outs to the nearest tenth of an hour if the rounding policy is “fair and neutral on its face” and “is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” See’s Candy Shops, Inc.’s rounding policy was fair and neutral on its face, and actually wound up benefitting employees generally (apparently employees are more often late to work than early). Therefore, the policy was lawful.
On the other hand, if the rounding policy had been biased (perhaps, such as a policy that always rounded down), then the employer could be in violation of the Labor Code. The determination would be based on the facts of the particular case.
In so holding, the court dismissed application of Labor Code § 204, finding that that statute only designated when employees would be paid – not how wages earned should be calculated.