In a recent decision by a California Court of Appeals, it was found that timekeeping rounding continues to be a lawful and acceptable practice for employers.
In AHMC Healthcare, Inc. v Superior Court, the Court of Appeals ruled that California employers may continue rounding hours worked – a practice that also follows Federal guidelines. To round hours employers must have a policy that is neutral. This means sometimes the rounding is in the employee’s favor and sometimes it is in the employer’s favor. The policy must also be consistent across all staff and all scenarios.
With past California case law, employers were told it was okay to round to the nearest tenth of the hour, and now employers have even more clarity and latitude to round to the nearest quarter hour (15th minute). Outside of California this is a very common practice and a sigh of relief for many California employers who are trying to simplify their payroll practices.
Key takeaways for employers who wish to establish rounding practices:
- The practice must be neutral, consistently applied, and favor neither the employer or employee to a significant degree.
- The practice should not be applied on an individual employee basis.
- Employers may still track and pay hours to the minute – rounding is not required, but again whatever practice an employer uses, it must be applied consistently to all personnel.
- Companies should train managers on proper timekeeping, the difference between rounding and allowing employees to work off the clock (which is NEVER acceptable).
- Companies should clearly communicate their rounding policy to employees at the time of hire, or at the implementation of a new rounding policy.
- And of course, employers should be sure handbooks, policies, and payroll systems are regularly updated and reviewed for accuracy. Need help in this area? Just Ask Us, TPPS is here to help!