California Employment Law: Precise Payment for ‘All Hours Worked,’ No Rounding Allowed

California mandates fair pay for every minute an employee serves their employer, under its robust labor laws. Despite this, a prevalent practice known as “pay rounding” often leaves employees underpaid.

Does this scenario resonate with you? If you suspect your employer is skimming minutes off your worked hours, those minutes, when accumulated, translate to lost wages. You might be owed more than you think.

‘PAY ROUNDING’ EXPLAINED

In California, Wage Orders emphasize that employees must be compensated for every minute worked. Traditionally, businesses employed rounding systems to calculate pay. While California law once permitted rounding if it was neutral and fair in application, the regulation has seen a shift.

Nowadays, numerous businesses use timekeeping software or devices to track hours, which often rounds the total minutes worked in a shift to quarter-hour increments, despite being capable of tracking exact minutes.

For instance, under a quarter-rounding system, if an employee clocks in at 6:00 p.m. and clocks out at 7:03 p.m., the employer might round down the time to 1 hour (60 minutes). However, California law now mandates that the employee be paid for 1.05 hours, with the exact figure, down to two decimal places, displayed on the paystub. Similarly, if an employee clocks in at 6:00 p.m. and out at 7:37 p.m., the employer should log and pay 1.62 hours, as rounding down to 1.5 hours is no longer lawful.

VARIED ROUNDING POLICIES, SAME OUTCOME: UNFAIR PAY

Rounding policies differ across companies—some round to the nearest 3, 6, or 15 minutes. Regardless of the approach, pay rounding is illegal in California.

Concerned employees should reach out for a complimentary consultation. Our adept employment attorneys at the Law Offices of Kyle K. Lauby can examine your paystubs at no cost, helping you ascertain if you have a claim for unpaid wages against your current or previous employers.

In some cases, rounding may seem beneficial if employees receive more “round ups” than “round downs.” Yet, a comprehensive review in Camp v. Home Depot U.S.A., Inc., disclosed that about 43% of employees had minutes shaved off due to rounding.

A recent verdict (October 2022) by the Sixth District Court of Appeals, spotlighting a case initiated by some Home Depot employees, declared rounding policies illegal if they lead to underpayment.

The court’s judgement underlines that, considering California’s stringent wage and hour statutes, any practice causing underpayment is unlawful, even if it benefits as many or more employees on average.

If your employer’s rounding policy is leaving you shortchanged, it’s time to act. Contact our seasoned employment lawyers at the Law Offices of Kyle K. Lauby for a free consultation and paystub review today. We are dedicated to ensuring you receive every cent you are legally owed for your hard work.