In order to comply with their obligation to maintain accurate records of the hours worked by their non-exempt employees, most employers require employees to record the times at which they start and stop work each day. Some employers utilize electronic timekeeping software, while others utilize mechanized time clocks or timecards that are completed by hand. Regardless of the method they utilize to track the time worked by non-exempt employees, however, employers are often confronted with time records that reflect employees working slightly more or less than they were scheduled to work. An employee scheduled to work from 8:00 a.m. to 4:30 p.m. may clock in at 7:57 a.m., for example, and clock out at 4:29 p.m.
Employers should maintain records that reflect the precise times at which their non-exempt employees begin and end work each day, as well as the precise times at which they begin and end their meal periods. When calculating time worked for payroll purposes, however, federal law permits employers to round starting and stopping times to the nearest increment of five, six or 15 minutes. The California Division of Labor Standards Enforcement (DLSE) has similarly endorsed the rounding practices permitted under federal law, and many employers have adopted rounding practices based on federal law and the DLSE’s enforcement policy. Despite the widespread acceptance of the practice, however, no California statute or judicial decision has officially authorized the practice of rounding.
Earlier this year, a California trial court held that rounding times to the nearest six minutes violated state law. The California Supreme Court has ordered review of that decision, and the appellate court opinion on the subject should be forthcoming soon. Although we expect that the appellate court will endorse the rounding practices authorized by federal law, and endorsed by previous California trial court decisions, state law is technically uncertain at this time with respect to rounding. As such, employers should assess their options and practices carefully, and make informed decisions on whether to round the starting and ending times reflected on employee time records. Employers who elect to utilize rounding practices should assure that they do so evenhandedly, and that, over time, they fully compensate employees for all time they actually spend working.
While the legality of rounding practices will hopefully be confirmed soon, employers should be careful to distinguish rounding issues from the correction of incorrect time entries. If employees record their starting or ending times inaccurately, employers are not required to pay for time that does not actually represent hours worked. If an employee’s time records are inaccurate, the employer should consider correcting the entries in question and asking the employee to initial or otherwise document approval of the correction.
Rounding of employee time records is a common practice, but one that presents some legal issues employers should consider carefully. If you have any questions about the rounding of time records or any other issue relating to employment law, please contact one of our attorneys:
Daniel F. Pyne III
Richard M. Noack
Ernest M. Malaspina
Erik P. Khoobyarian