Hunton Employment & Labor Perspectives

A California Court of Appeal recently found that California employers can lawfully apply the federal standard for rounding. This standard is set forth in 29 CFR Sec. 785.48(b), and previously has been adopted by California’s Department of Labor Standards Enforcement (“DLSE”).  29 CFR Sec. 785.48 (b) permits an employer to round an employee’s starting time and stopping time to the nearest 5 minutes, or one-tenth, or quarter of an hour, assuming the rounding will not result in a failure to compensate the employees, over time, for all the time they have actually worked. The DLSE had previously adopted this standard in its Enforcement Manual. In the October 29, 2012 published decision in See’s Candy Shops v. Superior Court of San Diego County, No. D060710, the court concluded that the federal/DLSE standard is legal in California, if the employees are fully compensated over a period of time.  See also Alonzo v. Maximus, Inc. (C.D. Cal. 2011) 832 F.Supp.2d 1122, 1126. (“[t]his ‘regulation permits employers to use a rounding policy for recording and compensating employee time as long the employer’s rounding policy does not ‘consistently result[] in a failure to pay employees for time worked.’ ’ ”). The Court rejected Plaintiff’s argument that the federal regulation is inconsistent with California Labor Code Section 204, which provides that “all wages [other than certain specified exceptions] are due and payable twice during each calendar month.” Plaintiff essentially argued that employers should be required to engaged in a mini actuarial process at the time of payroll. The Court rejected this argument.