END OF AN ERA? Payroll Rounding Practices in Question


By Jennifer Jacobus, PHRca, SDEA Director of HR Services

California has seen several cases in recent years where an employee has claimed that they were not paid for all hours worked.  In a recent case, Woodworth v. Loma Linda Univ. Med. Ctr., the California Court of Appeal has issued another ruling on this subject.

Woodworth filed a claim against Loma Linda University Medical Center for unclaimed wages mostly caused by the Company’s practice of rounding hours worked for payroll purposes.

Like most employers who utilize rounding practices, the employer in this case had a neutral rounding policy that rounded time punches to the nearest tenth of an hour. During the investigation, it was confirmed that 51.4% of employees were paid for more time than they were on the clock, 47.4% were paid for less, and the remaining 1.1% were unaffected. Because of this, the medical center’s expert concluded that the policy was permissible because there was no advantage to either the company or the employees.  Not surprisingly, the courts did not agree based on another recent ruling that held that when an employer “can capture and has captured the exact amount of time an employee has worked during a shift, the employer must pay the employee for ‘all the time’ worked.” 

So what does this mean for California employers using rounding practices?  While the California Supreme Court will have their say in this case, it is recommended that employers currently using rounding practices consider stopping this practice immediately and instead pay employees on actual time recorded and worked, even if this means a few minutes of overtime here and there.  It is also recommended that employers go back and audit their practices to make sure employees were, and are, paid for all hours worked.

This will be a big change for those who do utilize rounding, so we will keep you posted with any updates.

If you have any questions, call SDEA at 858-505-0024.  Remember we are not just here for you, we are HeRe with you.

Contact us: 858.505.0024