Under California law, employees are entitled to be paid for any and all time spent working for an employer. However, there is a common practice that businesses use which causes employees to get the short end of the stick: “rounding pay.”
Sound familiar? If you think your employer is shortchanging you by not fully accounting for all minutes worked — which can quickly add up to hours — you may be entitled to lost wages.
California Wage Orders repeatedly mention that an employee is to be paid for all time worked. Historically, companies have used rounding systems when it comes to calculating pay for such time. California previously allowed for such rounding policies if the police was neutral on its face and neutral as applied.
These systems, currently in place at countless businesses, are facilitated via a timekeeping software and/or machine of some sort. They will frequently round hours worked off of total minutes completed in a shift. Total hours are then calculated and displayed on pay stubs in increments, like quarter-hour blocks. (This in spite of the fact that the software does indeed track the exact number of minutes worked.)
And, while the law in California previously allowed a rounding policy if it was neutral on its face and in application, that is no longer the case.
For example, in a quarter-rounding policy, if an employee clocked in at 6:00 p.m. and clocked out at 7:03 p.m., the company would count that as 1 hour total (60 minutes). However, under California law, the employee must be paid for 1.05 hours and the exact number, caried to two decimal places must be shown on the paystub. Another example of a quarterly rounding violation would be if an employee clocked in at 6:00 p.m. and out at 7:37 p.m., the company might round the pay to 1.5 hours. However, any rounding of pay in California is illegal and in this instance the employer must log and pay 1.62 hours to the employee.
Of course, the rounding policies of companies vary from one to another. Some places will round to the nearest 3-minute mark, some to the nearest 6-minute mark and others to the nearest 15-minute mark. Regardless of the policy the company adopts, rounding pay is illegal in California.
Employees with questions or concerns about pay rounding should contact us immediately for a free consultation. Our attorneys can review your paystubs for free and let you know if you have a case against you current or former employers for unpaid wages!
Sometimes a rounding policy may benefit an employee if they receive, on average, more “round ups” compared to “round downs.” But a detailed analysis in Camp v. Home Depot U.S.A., Inc., revealed that approximately 43 percent of employees LOST minutes due to the rounding of shifts.
In a recently published decision (October 2022) related to the case that some Home Depot workers brought to light, the Sixth District Court of Appeals said that a rounding policy is illegal when it can result in underpayment.
“I conclude that in light of California’s wage and hour laws and strong public policy favoring timely payment of wages for all hours worked, such a practice is unlawful if it results in the underpayment of all wages due to an employee,” the court’s decision states.
It adds, that “…A practice that condones the underpayment of any employees’ wages merely because, on average, as many or more employees are either fully compensated or overpaid by that same practice is unlawful.”
So, if your employer is paying you in rounded-out chunks of time versus to the minute, you are indeed being shortchanged and can take legal action. Contact one of our experienced employment lawyers today for a free consultation and review of your paystubs. Our attorneys will be sure to review all aspects of your pay to make sure you are receiving every penny you are legally entitled to at your job!