Employment Law Daily Employee claim that rounding policy deprived him of overtime pay falls short on appeal
Wednesday, May 4, 2016

Employee claim that rounding policy deprived him of overtime pay falls short on appeal

By Ronald Miller, J.D. A call center employee’s attempt to revive his claim that his employer’s policy of rounding all employee time stamps to the nearest quarter hour deprived him of earned overtime pay failed on appeal. The Ninth Circuit found that the employee failed to demonstrate the existence of material fact as to his rounding claim, his logging-in claim, or derivative state law claims. Further, because the district court granted summary judgment on the employee’s individual rounding claim, there was no need to consider whether the claim could form the basis of a viable class action (Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership, May 2, 2016, Bybee, J.). The employer operated a call center where its employees fielded telephone calls from customers. In May 2010, the employer transitioned to a new online timekeeping system. The timekeeping system directly linked an employee’s time stamps to a "soft-phone system" that must be activated before employees can begin taking customer phone calls. When an employee logs into the soft-phone system to begin work, he is automatically clocked into the timekeeping system. Similarly, when an employee logs out of the system, he is automatically clocked out. Rounding procedure. The employer’s compensation policies included a "rounding" procedure that relied on the time stamps from the soft-phone/timekeeping system. Employee time was rounded to the nearest quarter hour. At the end of each pay period, employees were paid in accordance with these rounded figures. The employee was paid on an hourly basis, and his clock-ins and clock-outs were rounded to the nearest quarter hour. Under the timekeeping system, the employee gained or broke even in 58 percent of the shifts he worked. However, as a result of the rounding policy, he lost $15.02 in compensation. Additionally, he once logged onto an auxiliary computer program before logging into the timekeeping system, and lost one minute of compensable time. Wage claims. The employee’s claims centered on two practices which, he argued, violated the FLSA and California wage laws. His "rounding claim" alleged that the employer’s rounding policy deprived him of the full amount of his earned wages. His "logging-in" claim alleged that the employer permitted employees to load auxiliary computer programs before logging into the timekeeping system, which denied him full compensation for the time spent actually working. The district court determined that because the company’s rounding policy was neutral on its face and in practice, it complied with 29 C.F.R. Sec. 785.48(b), the federal rounding regulation. The court also held that the one minute of uncompensated time the employee spent logging into an auxiliary computer program before logging into the timekeeping software was de minimis as a matter of law. Rounding claim. The Ninth Circuit first addressed the employee’s challenge to the validity of the rounding timekeeping method generally. Federal regulations have endorsed the use of "rounding" practices for more than 50 years, it noted, and permit "employers to efficiently calculate hours worked without imposing any burden on employees," offering employers a "practical method for calculating work time" and a "neutral calculation tool for providing full payment to employees." Moreover, a 2012 decision by a California appeals court in Candy Shops, Inc. v. Superior Court confirmed that the federal rounding rule also applies to California state labor claims, so long as a company’s "rounding-over-time policy is neutral, both facially and as applied." The employee argued that the employer’s rounding policy was not facially neutral or neutral as applied to him, a contention the appeals court rejected. He alleged that if an employee loses any compensation due to the operation of a company’s rounding policy, the policy should be found to violate the federal rounding regulation. However, the employee read into the federal rounding regulation an "individual employee" requirement that does not exist, and misunderstands the purpose of rounding. Employers use rounding policies to calculate wages efficiently. If a rounding policy does not permit both upward and downward rounding, then the system is not neutral, and will result in the failure to compensate employees properly for all time actually worked. The employee’s argument would undercut the purpose of a rounding policy, and gut its effectiveness. In the final analysis, the appeals court concluded that the employer’s rounding policy passed muster. First, it was facially neutral, as it rounded all employee time punches to the nearest quarter hour without an eye towards whether the employer or employee is benefitting from the rounding. Moreover, the employee’s own compensation records demonstrated that the rounding policy was neutral in its application. Sometimes he gained compensation, and sometimes he lost compensation. Thus, the rounding system operated exactly as the federal rounding regulation intended, and the employee failed to establish the existence of a material fact dispute as to whether, "over a period of time," he was not properly compensated for his work. Logging-in claim. The employee’s claim that the employer did not properly compensate him for the one minute he spent logging into an auxiliary computer program before clocking into the timekeeping system also failed. This one minute amounted to non-recoverable de minimis time. The appeals court rejected the employee’s assertion that the district court erred in applying the de minimis doctrine to the facts of this case.

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