There are many practices that employers engage that could disadvantage their employees. California has long helped to lead the way in protecting workers’ rights in large part by having employment rules that seek to protect employees from abusive practices. California wage and hour statutes often provide more benefits to employees than the federal counterparts, including, for example, providing for meal breaks, rest breaks, recovery periods, requiring the employers to provide clear paystubs to the workers, and setting higher standards than federal minimum and overtime wage laws.
In recent years, there have been several lawsuits that have become high-profile legal cases specifically because they question the fairness of a common payroll practice: rounding. Timeclock rounding has been used by employers for decades as a way to quickly calculate the wages they must pay workers for their time.
Companies may pay workers in increments of five, 10 or even 15 minutes. To calculate what workers should receive in their paychecks, the company may need to round up or down from the exact time that the workers clocked in or out of their shifts. A recent California Court of Appeals ruling has affirmed that this rounding practice is a violation of California labor laws, although the case has now moved to the California Supreme Court for additional review.
Time Rounding No Longer Permissible
California law and the wage orders clearly state that workers should receive pay for all their time worked. What constitute “hours worked” has been the crux of multiple court rulings in the past, and it has played a role in recent timeclock rounding claims as well. In 2021, the California Supreme Court determined that rounding a half-an-hour meal break was unacceptable. More recently, the Court of Appeals held that the employer must pay the employee for all the time worked and recorded in the employer’s electronic time-keeping system.
Effectively, workers in California have claimed that timeclock rounding deprives them of their right to fair wages for all time worked. Given that there is now easily accessible technology that can track timekeeping down to the second, workers claim that rounding timeclock records is an obsolete and unnecessary practice.
In this recent appeal case, the court ruled that timeclock rounding in general may not be a viable practice for most businesses. Even small adjustments to payroll records can add up to multiple hours of unpaid wages for the workers employed at an organization. Those workers could then potentially pursue a wage claim on the basis that the rounding of their time clock records deprived them of payment in full for all of the time that they worked.
Effective wage and hour claims often come down to an understanding of state law and proper documentation of when someone worked versus what pay they received. Understanding how both state statutes and California court precedents affect wage rights for hourly employees may benefit those who believe they have not received payment in full for the time they worked.