California Supreme Court Issues Warning for Employers who Round Time

In Troester v. Starbucks Corp., No. 14-55530 (Supreme Court of California, July 26, 2018), the California Supreme Court found that all amounts of time worked by employees must be compensated.

Many employers “round” the time from time clock punches when processing payroll.  Rounding is acceptable if it does not disadvantage employees.  However, the rationale for allowing rounding throughout California was undermined by the recent Starbucks decision.  The Court reiterated the statutory mandate that employees must be compensated for all time worked regardless of the difficulty in tracking small amounts of time.

The Court pointed out that employers are in a better position than employees to devise alternatives that would permit the tracking of small amounts of regularly occurring work time. The Court also stated that technological advances may help with tracking small amounts of time. “An employer may be able to customize and adapt available time tracking tools or develop new ones when no off-the-shelf product meets its needs.”

The bottom line is that all amounts of work time must be compensated in California.  This decision involved work by a shift lead after closing the Starbucks store.  The total amount of time at issue amounted to approximately 12 hours and 50 minutes over 17 months.  At the then-applicable minimum wage of $8 per hour, this unpaid time added up to $102.67, not including any penalties or other remedies.  Even though this seems minimal, the Court pointed out that this amount was “not de minimus at all to many ordinary people who work for hourly wages.”

I recommend all employers who round time consider paying to the minute.  I believe rounding practices will come under closer scrutiny given this Starbucks decision.  Please contact our office if you have any questions about rounding time or compensation practices.