We recently reported that a San Diego Superior Court found that See's Candy Shops violated California law by rounding employee time entries to the nearest six minutes.  The Fourth District Court of Appeal let the ruling stand.  Yesterday the Supreme Court ordered the Court of Appeal to review the case and decide the rounding issue.

In September, the San Diego Superior Court found that See's Candy Shops violated California law by rounding employee time entries to the nearest six minutes. See's Candy petitioned the California Fourth District Court of Appeal for review and the petition was denied. See's then petitioned the California Supreme Court for review. Organizations representing employers, including Seyfarth Shaw, filed amicus letters urging appellate review of the trial court's ruling because of the widespread concern to California employers on the issue of rounding.  The Supreme Court granted the petition for review and ordered the Fourth District Court of Appeal to review and decide the case.

For years, the position of both the US Department of Labor ("DOL") and the California Division of Labor Standards Enforcement ("DLSE") has been that rounding employee time entries is lawful. The DOL's regulations and the DLSE enforcement manual permit rounding "to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour." Both the DOL's regulations and the DLSE's enforcement manual note, however, that rounding is acceptable provided that the practice 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." In the case against See's Candy, the San Diego Superior Court went against the DOL and DLSE interpretations and found that an unbiased rounding procedure violated California law, which according to the court, required payment for all time worked.

There have been a growing number of class action lawsuits in California challenging employer rounding practices and employers are concerned that the ruling in See's will lead to a wave of class actions against thousands of employers who round time entries in California. Now that the Fourth District Court of Appeal must review the case and decide this issue, employers may soon receive clarity on this issue. In the meantime, however, employers in California who round employee time entries should be aware of the potential threat for litigation and should review their rounding policies and practices with counsel to evaluate potential issues and exposure.

Co-authored by Jeffrey Berman andBrandon McKelvey