A California appellate court held an employer’s use of a rounding policy for its non-exempt employees complied with California law because it did not disfavor employees.  (Donohue v. AMN Services, LLC (Dec. 10, 2018) Case No. D071865.) 

AMN employed Donohue as a nurse recruiter who was non-exempt from California’s overtime requirements.  AMN tracked recruiters’ time with a computer-based timekeeping system, in which recruiters would punch in for the day, punch out when they took a meal break, punch back in when they returned from their meal break, and punch out at the end of the day.  AMN rounded recruiters’ punch times to the nearest 10-minute increment.  For example, all punch times between 7:55 a.m. and 8:04 a.m. would record as 8:00 a.m., and all punch times between 8:05 a.m. and 8:14 a.m. would record as 8:10 a.m.  Donohue brought a class action lawsuit alleging AMN’s rounding policy violated various California wage and hour laws.  The trial court granted summary judgment for AMN, and the court of appeal affirmed.

The court noted that California law permits employers to use a rounding policy if it is “fair and neutral on its face and it 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.”  Under this standard, “an employer’s rounding policy is fair and neutral if on average, it favors neither overpayment nor underpayment; but such a policy is unacceptable if it systematically undercompensates employees because it encompasses only rounding down.” 

The court held AMN satisfied this standard as a matter of law based on expert testimony from a labor economist.  The economist analyzed 311 recruiters’ time records and determined that AMN’s policy resulted in a net surplus of 1,929 work hours in paid time for the recruiters, including a net surplus of 9.82 hours for the representative plaintiff herself.  The court rejected the plaintiff’s attempt to raise a triable issue based on expert testimony from a statistics professor.  Although the statistics professor found that the rounding policy resulted in AMN failing to pay certain employees for 2,631 hours worked, the court held his testimony was flawed because it focused solely on employees who happened to have a late or short meal period.  Because AMN’s rounding policy on the whole was neutral as to all class members, the policy was lawful.

Jackson Lewis wage and hour specialists are available to assist employers with designing and implementing rounding policies to ensure compliance with state and federal law.