In June, the California Court of Appeals in AHMC Healthcare, Inc. v. Superior Court of Los Angeles County found that the employer’s policy of rounding employee time records by 15 minutes is lawful.
The suit was brought by two employees who argued that the company’s policy of rounding to the nearest quarter-hour unfairly reduced wages and was a violation of California law that requires accurate time keeping. The employer, AHMC, argued that the policy was neutral in effect (AHMC rounded both up and down), and therefore not illegal.
A statistics and economics expert was called to analyze the data regarding time keeping at the company and found that the policy resulted in adding hours for 48% of employees at the location where the two plaintiffs worked, and deducted hours for 51% of the workers. The expert also found that one of the plaintiff’s lost 3.7 hours while the other lost 1.6 hours. However, across all of the employer’s locations, employees as a whole were significantly overcompensated due to the rounding practice. The employer’s rounding practice did not systematically undercompensate employees.
Despite the expert’s finding that the plaintiff employees lost hours due to the rounding, the court sided with the employer and found that the policy was valid. The court found that the plaintiffs failed to establish any bias in the rounding practice. The fact that a bare majority of employees at one location lost a minimal amount of time, on its own, was not enough for the court to find a triable issue of fact. In addition to upholding the policy, the court underlined the crucial aspect of neutrality required in all rounding policies. Rounding practices that unfairly target a particular class of employees could be illegal.
Despite this pro-employer ruling, we still recommend that you accurately track hours worked down to the minute. If you do decide to use a rounding policy to calculate hours, ensure that it is applied neutrally to all employees and that you carefully monitor hours and pay to ensure that you are not underpaying any classes of employees.