In an area involving much litigation, the California Supreme Court recently disapproved of the use of a rounding policy when determining whether the timing and length of a meal period is compliant with the Labor Code.
Under Labor Code § 512, employees are entitled to a 30-minute meal period no later than the end of the fifth hour of work, and another 30-minute meal period that begins no later than the end of the tenth hour of work. Under Labor Code § 226.7, if the employer does not provide an employee with a compliant meal period, then the employer must pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal period is not provided, commonly referred to as the meal period “premium.”
Some employers have implemented timekeeping systems which round time punches to the nearest increment of time, generally 7 to 10 minutes, as a practical method for calculating the time worked by employees. California Courts of Appeal have approved of rounding policies to track hours worked in the past if it is fair and neutral on its face and as applied.
The Court clarified that, while a rounding policy to track hours worked may be permissible, as long at it is fair and neutral on its face and as applied, the practice of rounding time punches for employee meal periods is inconsistent with the purpose of the Labor Code provisions providing for premium pay for shortened or missed meal periods.
An employer cannot engage in the practice of rounding time punches – that is, adjusting the hours that an employee has actually worked to the nearest present time increment – in the meal period context. The meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective.
The premium is owed whether an employee takes no lunch or takes a one minute late or short lunch. Given the relatively short length of a 30-minute meal period, the potential incursion that might result from rounding is significant. A policy which rounds time may result in short and/or late meal periods which would trigger the requirement to pay the premium even though the time records show a compliant meal period.
Whether rounding policies are compliant with the Labor Code has yet to be determined by the California Supreme Court. The Court’s opinion not only disapproved of rounding policies in the context of meal periods, it also cast doubt on rounding policies overall, emphasizing that the de minimis rule is not applicable in California and all worktime, no matter how miniscule should be accounted for.
A rounding policy has the potential to expose employers to a significant liability. There is no question now that rounding policies should not be used in the meal period context and employers should reconsider the value of rounding policies in general in light of this decision.
If your company has any questions about whether its rounding policy is compliant, please contact Nicholas Roxborough at (818) 992-9999, ext. 222, Drew Pomerance at ext. 212, Michael Adreani, at ext. 234, Marina Vitek, at ext. 236, or Trevor Witt, at ext. 224.