Rounding Employees' Start and Stop Times Need Not Average Out Exactly, 9th Circuit Rules
Author: Michael Cardman, XpertHR Legal Editor
May 6, 2016
Much like a mom doesn't have to parcel out her kids' ice cream into servings that are exactly equal, an employer doesn't have to ensure that its policy of rounding employees' time stamps evens out perfectly, a federal appeals court has ruled.
A longstanding Fair Labor Standards Act (FLSA) regulation allows employers to round their employees' starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour, as long as this rounding "will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked."
In Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership, the 9th Circuit Court of Appeals became the first federal appeals court to weigh in on this regulation. At issue was a rounding policy used by Time Warner Entertainment-Advance/Newhouse Partnership at one of its call centers, which resulted in one of its employees losing a grand total of $15.02 in compensation over the 269 shifts he worked during a 13-month period.
When an employee uses [the company's timekeeping system] to clock in for work, to clock in and out for lunch, and to clock out at the end of the day, the system rounds each time stamp recorded to the nearest quarter-hour. For example, an employee who clocks in at 8:07 a.m. to begin his workday would see his wage statement reflect a clock-in of 8:00 a.m., rounding his time to the nearest quarter-hour and crediting him with seven minutes of work time for which he was not actually on the clock. Similarly, an employee who clocks out at 5:05 p.m. to end her workday would see her wage statement reflect a clock-out of 5:00 p.m., again rounding her time to the nearest quarter-hour and deducting five minutes of work time for which she was actually on the clock.
The employee sued for back wages and damages, claiming that if an employee loses any compensation due to the operation of a company's rounding policy, that policy should be found to violate the federal rounding regulation.
If accepted, this argument "would undercut the purpose and would gut the effectiveness of a rounding policy," the 9th Circuit held. "In fact, [the employee's] preferred interpretation would require employers to engage in the very mathematical calculations that the federal rounding regulation serves to avoid."
As long as rounding is done neutrally "without an eye towards whether the employer or the employee is benefiting from the rounding," it will not violate the FLSA - even if every employee does not always gain or break even over every pay period, the court concluded.. .