Ninth Circuit Clarifies Rules for “Rounding” Employee Hours

employees and salaries bindersIs your employer required to pay you for every minute that you work, or is your company allowed to round your hours up or down? The United States Court of Appeals for the Ninth Circuit recently considered this question, and clarified how employers are allowed to keep track of their employees’ time.

The case of Corbin v. Time Warner revolved around a missing $15.02 over the course of 13 months. The plaintiff, Andre Corbin, worked for call center operated by Time Warner Entertainment-Advance/Newhouse Partnership (TWEAN). TWEAN kept track of employee hours using software that clocks an employee into work as soon as he or she logs into the company’s computer system. Similarly, the employee gets clocked out of work when he or she logs out of the computer system.

TWEAN’s timekeeping software automatically rounded an employee’s hours to the nearest 15 minutes. For example, if an employee clocked in at 9:03 am, the computer software would log that person as beginning work at 9:00 a.m. In the same way, if a person clocked out at 5:12 p.m., the computer would log that person out at 5:15 p.m. The computer rounded up or down based on the time the employee actually logged out.

Before filing his lawsuit, Corbin worked 269 shifts. In 58% of his shifts, he was either overpaid due to rounding up, or broke even. Overall, he lost $15.02 over the course of 13 months due to rounding down. While his lawsuit did not involve a large amount of money, Corbin’s missing $15 did cause the Ninth Circuit to consider an issue of first impression that had not been decided by any other U.S. Court of Appeals.

The Court of Appeals noted that Department of Labor has allowed some industries to use rounding on employee timesheets for almost 60 years. The current federal regulations allow to the nearest 5 minutes, nearest tenth of an hour, or nearest quarter of an hour, so long as the rounding does not result in a failure to fully compensate employees over time.

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Corbin argued that the failure to pay employees for any amount of time worked, no matter how small, was illegal under state and federal law. He also argued that unless every employee either gains or breaks even on every pay period, then the employer’s rounding system violates federal law.

The Ninth Circuit Court of Appeals disagreed, and found that Corbin’s reasoning would defeat the purpose of rounding systems entirely. Employers round up or down to make it easier and faster to process their payroll. If they had to recalculate every employee’s paycheck to make sure that the employee at least broke even, there would be no point to rounding an employee’s time in the first place.

In addition to having practical usefulness, the Court of Appeals also found that the rounding policy was neutral and did not harm employees. Even though some paychecks ended up slightly behind, others ended up slightly ahead. As a result, the net gain or loss was both negligible and neutral.

The case reaffirms that rounding employee time is an accepted practice, so long as it is done fairly and does not negatively affect employees. However, if an employer’s time-keeping practices end up shortchanging employees by more than a few dollars and cents it is likely that that employer could be held responsible in a wage and hour lawsuit.

If you are seeking an experienced wage and hour lawyer in Sacramento, please give Labor Law Office a call today.

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2017-12-13T21:46:30+00:00 June 17th, 2016|Wage and Hour|