Court Finds See’s Candy Policy of Rounding of Employee Hours Lawful

In late October, employer See’s Candy Shops was handed a sweet victory by the California Court of Appeals in a ruling that validates the company’s practice of rounding employee time entries to the nearest tenth of an hour. From Laura Reathaford of law firm Proskauer:

“The Court of Appeal rejected Silva’s contentions and held that ‘the rule in California is that an employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.’”

Three takeaways for employers in the state:

1. Rounding is only legal if it is fair:

“What this means for California employers is that a timekeeping system cannot always round (up or down) in such a way that benefits only the employer. The rounding policy should round both up and down from a midpoint so that over time, the rounding averages out in such a way that each employee is paid for all time actually worked.” (Proskauer)

2. Unless otherwise indicated, California labor law generally follows federal standards:

“In reaching its conclusion the Court first held that California follows the federal standard on rounding, which were codified in FLSA regulations more than 50 years ago… To conclude that federal and California law were parallel, the Court relied on the general rule that ‘California courts . . . look to [federal law] as guidance for interpreting analogous provisions of California law.’ That is, in the absence of some contrary California provision that supports the inference that California intended to diverge from similar federal law, California follows FLSA standards for like issues (e.g., the lawfulness of time clock rounding).” (Sheppard Mullin)

3. The ruling is also a victory for common sense:

“The appellate court’s interpretation of the Labor Code provisions at issue in the case tended more towards a common sense reading of statutes rather than a literal approach as pushed by the plaintiff. The court was careful not to expand the statutes beyond the purpose for which they were enacted. This approach is encouraging…” (Littler)

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