Global Compliance Desk – California

California: Latest Decrees on Working Time 

Recent Case law on Rounding of  Working Hours

According to the Fair Labor Standards Act (FLSA) recording of working time rules, infrequent and insignificant periods of time beyond the scheduled working hours, which cannot as a practical matter be precisely recorded for payroll purposes, may be disregarded. The courts have held that such periods of time are de minimis (insignificant). This rule applies only where there are uncertain and indefinite periods of time involved, a few seconds or minutes in duration, and where the failure to count such time is justified by industrial realities.

California has adopted the FLSA time-keeping regulations for rounding hours worked wherein the adopted standard allows an employer in California to round employee start and end times to the nearest five minutes, one-tenth of an hour or quarter of an hour, so that the time that is rounded averages out and the employees are fully compensated for all the time they actually worked. 

The California Courts have taken varying viewpoints on this matter-

In Candy Shops, Inc. v. Superior Court (2012), it was held that an employer may implement a rounding policy “if the rounding policy is fair and neutral on its face” and is used in a way that will not result in failure to compensate the employees for the time they have actually worked.

Contrary to the above, in Donohue v. AMN Services, LLC (2021), the California Supreme Court passed the long-awaited judgment wherein it was ruled that employers are required to follow strict compliance with  California’s Meal Break regulations and denounced the practice of rounding meal periods to the nearest time increment stating that a rebuttable assumption of liability applies when time records indicate shortened, delayed, or missed meal periods.

[To read more about Donohue v. AMN Services, LLC please refer to our previous blog]

Recently on October 24, 2022, the California Court of Appeal in Camp v. Home Depot U.S.A., Inc passed another important judgment on rounding policies. The court ruled against rounding policies.

Case Highlights

The plaintiffs, Delmer Camp, and Adriana Correa were hourly, non-exempt employees of Home Depot. The timekeeping system recorded the time to the minute that an employee punched in or out during a shift, including for meal breaks, then applied a quarter-hour rounding policy to the employee’s total shift time. (e.g., 6 hours and 3 minutes are rounded down to 6 hours; 6 hours and 8 minutes are rounded up to 6.25  hours).

A class action lawsuit was initiated against Home Depot on the basis that the company’s policies led to underpaying its employees. Correa was actually overpaid as a result of the rounding procedure, while Camp had been underpaid for the 4 and a half years by 470 minutes during his employment. The trial court favored a summary motion filed by  Home Depot claiming that the policy was neutral both in terms of its intent and how it was applied, favoring neither the employees nor Home Depot. Further, the decision of the trial court was appealed by the plaintiffs.

Decision

The ruling of the trial court was overruled by the 6th District Court of Appeal. It held that if an employer has the ability to capture the exact amount of time worked by an employee, the employer is required to pay the employee for “all time worked,” down to the minute recorded. Even a fair and neutral rounding policy, which would have been considered a viable defense under prior appellate court decisions, may no longer be a defense for employers with electronic timekeeping systems, exposing employers to significant wage and hour liability.

Take Away

Previously many California courts held that the de minimis doctrine provided a defense against claims that an employer failed to pay for all hours worked when the amounts of time at issue were short and there were practical administrative difficulties in recording the actual time worked by the employee. The Court concluded the de minimis doctrine was incompatible with California Labor Code and Wage Orders, which require payment for all time worked and generally confer broader rights to employees than the FLSA. The Court also explained that it was reluctant to adopt the de minimis doctrine when technological advances enable employers to more efficiently track small amounts of regularly occurring work time.

California courts are trending toward placing an absolute responsibility on employers to capture and pay for all work activities. Employers in California should therefore review all of their pay practices and policies to ensure they are in line with not only the law but also the precedents of the Courts.

 

Boot Up Time Compensable for Call Centre Workers

On October 24th, 2022, the US Court of Appeals for the Ninth Circuit (which covers California, Nevada, Arizona, Alaska, Hawaii, Idaho, Montana, Oregon, and Washington as well as the U.S. territories of Guam and the Northern Mariana Islands) in Cadena v. Customer Connexx LLC., published a unanimous opinion that because call center workers need a functioning computer to perform their jobs, time spent booting up or waking up their computers may be compensable under the Fair Labor Standards Act.

Case Highlights

The Cadena case laid down the following facts – 

• Workers are required to clock in and out using a computer-based timekeeping program and they are not pre-assigned computer systems.
• The workers estimate that it can take up to twenty minutes before the computer would boot up so they could clock in due to the age of the computer or whether the computer was off versus in sleep mode.
• When a shift ends, workers are required to close out of programs, clock out, then log off or shut down computers, and the average time was estimated between 4.75 to 7.75 minutes. 

The Nevada district court granted summary judgment to Connexx and found that the time spent booting up and down was not “principal activities” related to answering calls and scheduling tasks and thus stated that such booting time was not compensable.

Appellate Court Judgment

While the Ninth Circuit agreed that booting up was not a task the workers were hired for, it was a necessary task to “engage” the computer that contained the programs required to do the job. Thus in its decision, the Ninth Circuit Court stated that turning on the computer was integral and indispensable to the employee’s duties and, therefore, compensable under the FLSA.

The court limited its holding to turning on the computer at the beginning of the shift. The court found shutting down the computer was not integral to making calls, and was therefore likely not compensable.