Camp v. Home Depot-Employer Rounding Policies Under Scrutiny

The Sixth District California Court of Appeal held that despite evidence of neutrality of a rounding policy, the employer did not meet its burden of proof to show employees were properly compensated for all hours worked.

Home Depot used a time keeping system that rounded the employee’s total shift time to the nearest quarter-hour. While the system rounded, it also captured all time worked by employees to the minute.

Under the rounding practice, if the total shift time was recorded as six hours and three minutes, the time was rounded down to 6.00 hours. If the total shift time was six hours and eight minutes, the shift time was rounded up to 6.25 hours. Plaintiffs working for Home Depot in California filed a putative class action, alleging the practice resulted in failure to pay wages.

Home Depot moved for summary judgment on the ground that its practice of rounding time was neutral on its face, neutral as applied, and otherwise lawful under See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889.

In support of its motion, Home Depot presented evidence that showed that for 56.6 percent of the shifts reviewed, “employees were paid for the same or a greater number of minutes than their actual work time.” The employer also argued that employees lost minutes due to rounding on less than 44 percent of the shifts. Further, “for shifts that gained minutes due to rounding, the average gain was 3.6 minutes, and on shifts that lost minutes, the average loss was 3.5 minutes.”

The trial court agreed with Home Depot and held the rounding policy was “neutral on its face and [was] used in such a manner that it will not result, over a period of time, in failure to compensate employees properly for all the time they have actually worked.” Judgment was entered in favor of Home Depot, and plaintiffs appealed.

The Appellate Court reversed. Relying on the California Supreme Court decision in Troester v. Starbucks, as well as the decision in Donohue v. AMN Services, LLC, and departing from See’s Candy, the Court held Home Depot did not meet its burden of proof that plaintiffs were properly compensated for all time worked.

In part, the Court found that California law requires employers pay for all work performed, and that there is a:

“. . . complete absence of language, in the Labor Code or in the applicable wage order, authorizing time rounding that results in the underpayment of an individual employee for all time worked, where the employer can capture and has captured the employee’s worktime in minute increments.”

The Court further noted that although rounding was developed to efficiently calculate hours worked and was useful “in some industries, particularly where time clocks are used” – it was not clear that “any efficiencies were gained by Home Depot in capturing time worked in minutes … and then rounding that time to the nearest quarter hour.”

Home Depot’s argument that rounding made it easier “to produce verifiable wage statements” and produce “a pay stub that [was] easier for employees to decipher” was also rejected by the Court as the employer did not identify any California law “that privileges arithmetic simplicity over-paying employees for all time worked.”

As a closing remark, the Court invited the California Supreme Court to examine the validity of the rounding practice:

• “. . .where the employer can capture and has captured all the minutes an employee has worked and then applies a quarter-hour rounding policy” and

• “. . . to provide guidance on the propriety of time rounding by employers, especially in view of the ‘technological advances’ that now exist which ‘help employers to track time more precisely’.”

What Should Employers Conclude?

Employers who can track employee time to the minute shouldn’t use rounding methods. Those who must use rounding should confirm company policy ensures employees are compensated for all time worked. While the holding in Camp v. Home Depot is questionable since it departs from See’s Candy, employers can expect plaintiffs to cite this decision in rounding cases. 

Specifically, See’s Candy held that a neutrally applied rounding practice “is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees.” See’s Candy Shops, 210 Cal.App.4th at 903. The Legislature, the Division of Labor Standards Enforcement, or the California Supreme Court, may also weigh-in.   

Nicholas Kanter and Tal Burnovski Yeyni defend employers in California facing wage and hour and other employment related claims.