California Court Reverses Anti-Rounding Decision

In See’s Candy Shops, Inc. v. Superior Court, the California Court of Appeal for the Fourth Appellate District explicitly held that in California employers are entitled to use a timekeeping policy that rounds employee punch in/out times to the nearest one-tenth of an hour (a “nearest-tenth rounding policy”) if the rounding policy is “fair and neutral on its face” and “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.” The court adopted the standard used by both the United States Department of Labor and the California Division of Labor Standards Enforcement, bringing “sweet” news to employers who use rounding policies.

The very existence of these policies had been called into question by the trial court in this case when it granted summary adjudication to the plaintiffs on several of See’s key affirmative defenses in a certified wage and hour class action challenging See’s timekeeping policy. Two of these defenses encompassed See’s claims that: (1) its nearest-tenth rounding policy was consistent with state and federal laws permitting employers to use rounding to compute and pay wages and overtime; and (2) that its rounding policy did not deny the plaintiff or class members full and accurate compensation. In response to the trial court decision, See’s filed a writ of mandate petition challenging the court’s decision on these two defenses, which was summarily denied by the appellate court. 

Undeterred, See’s filed a petition for review with the California Supreme Court, which granted the petition and ordered the appellate court to vacate its prior order and issue an order to show cause in the matter. After extensive further briefing of the issues by both parties, and the filing of several briefs by amici curiae, See’s got its just desserts when the appellate court ordered the trial court to vacate its decision and enter a new order denying summary adjudication to the plaintiffs as to See’s affirmative defenses. Of course, while the ruling leaves open the issue of whether See’s will ultimately prevail in proving its rounding policy is fair and neutral, it does spare rounding policies from what could have been a death knell.

To learn more about the decision, please see Littler's ASAP, Sweet News on Rounding for California Employers: See's Candy Shops, Inc. v. Superior Court, by Laura Hayward.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.