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Punch Rounding Not Absolute Defense to Wage Claim

This article is part of our 2022 Labor & Employment New Year Roundup.


Employers sometimes adopt punch rounding policies for employee time keeping in circumstances where it is difficult to determine exactly when the employee starts and stops working, to simplify the calculation of pay, and to render wage statements easier for employees to self-audit. The California Supreme Court, the California Division of Labor Standards Enforcement, and the United States Department of Labor all recognize that rounding time punches to the nearest five minutes, one-tenth, or quarter hour is a practical method for calculating work time and that it can be a neutral calculation tool for providing full payment to employees.

Camp v. Home Depot

Nevertheless, the California Court of Appeal for the Sixth District has ruled that an employer’s facially and statistically neutral quarter hour rounding policy and practice is not an absolute defense to a class action plaintiff’s wage claims where the employer could and did track the exact time in minutes that an employee worked each shift, and those records showed the class plaintiff was not paid for all of the time he worked.

In Camp v. Home Depot, plaintiff Camp alleged that Home Depot’s electronic timekeeping system captured each minute worked by employees, but that due to Home Depot’s quarter-hour rounding policy, employees were paid for less time than they worked. Home Depot’s records reflected that Camp was paid for 7.3 hours less than his time punches showed he worked during the sample period. Home Depot argued that Camp’s claims should be dismissed because its rounding practice was neutral both facially and as applied across the putative class, and that punch times captured by a timekeeping system may not “accurately reflect an employee’s work time.”

The court rejected Home Depot’s arguments, finding that it had failed to prove Camp’s time punches were not a precise record of his work time and that its neutral rounding policy did not foreclose Camp’s wage claim as a matter of law. The court also noted that Home Depot failed to provide evidence to support its contention that punch times may not accurately reflect work time and that company policy stated that “[a]s a rule, you should not delete punches from timecards because they represent actual times that associates started and stopped working.”

The court wrote that it was guided by the California Supreme Court’s decisions in Troester v. Starbucks that held that Starbucks had to pay employees for even small amounts of regular and required off the clock work, and Donohue v. AMN that held punch rounding is not a defense to short or late meal and rest periods. The Camp decision is on appeal to the California Supreme Court but there is presently no indication that the high court will hear the appeal.

What this means for employers: Camp serves as a reminder that non-exempt employees must be paid for the actual time during which the employer knew or should have known that the employee was working on its behalf and that shortcuts, even ones that are devised to be fair to employees, may not function as an absolute shield against wage claims.

Camp also highlights the importance of technology in the collection of employee time data and the calculation of payroll. Home Depot could not rid itself of Camp’s claim on a motion for summary judgment, even though it believed Camp’s time punches did not reflect his actual work time, because it was not able to prove otherwise. The electronically collected punch data was presumed to accurately reflect Camp’s work time. The Camp decision emphasizes that California employers, not employees, bear the burden of tracking small amounts of regularly occurring worktime. Employers that collect employee worktime data from multiple sources must be prepared to prove which source provides the best record of employee worktime.

California employers should work with their counsel to understand the full implications of any punch rounding policies they employ. Employers should:

  1. Work with counsel to insure their rounding practices are facially and statistically neutral as applied.
  2. Limit the use of rounding to circumstances where it is impossible, or at least difficult, to ascertain the actual work time of the employee. If time punches reflect the actual work time of the employee, by all means, calculate pay based on the punch and cease rounding.
  3. Establish one type of accurate time record and calculate payroll based on that record alone and be prepared to prove how other data collected does not reflect employee work time.
  4. Keep in mind that the payment of hours worked is not the only issue to consider when collecting employee time data. For example, the timely commencement of employee meal periods is triggered by the commencement of work, which may not be the start of the shift. Employee meal periods may need to be adjusted based on the punch in time if employee time punches accurately reflect the commencement of the employee’s shift, and employees should be provided complete meal periods even when rounding policies are used.

About JMBM’s Labor & Employment Practice

JMBM’s Labor and Employment attorneys counsel businesses and management on workplace issues, helping to establish policies that address problems and reduce job-related lawsuits. We act quickly to resolve claims and aggressively defend our clients in all federal and state courts, before the Department of Labor, the NLRB, and other federal, state and local agencies, as well as in private arbitration forums. We represent employers in collective bargaining negotiations and arbitration.

This update is provided to our clients, business associates and friends for informational purposes only. Legal advice should be based on your specific situation and provided by a qualified attorney.