24 Cal. App. 5th 1014
Cal. Ct. App. 5th2018Background
- AHMC hospitals used an automated timekeeping system that rounded employee clock-ins/outs to the nearest quarter hour (and rounded meal breaks between 23–37 minutes to 30 minutes).
- Plaintiffs (hourly employees) sued for unpaid wages and related claims, alleging rounding undercompensated employees. Two named plaintiffs' records showed minimal aggregate losses over the study period.
- Parties stipulated to an expert analysis of millions of shifts across two hospitals (San Gabriel and Anaheim) for ~2012–2016 showing rounding sometimes added and sometimes subtracted minutes; combined, employees received a net increase in compensated hours.
- At San Gabriel a plurality/majority of employees gained or broke even and the facility showed a net surplus of paid hours; at Anaheim a slight majority of employees lost small amounts but the facility still showed a net surplus overall.
- The trial court denied both sides’ summary adjudication motions; AHMC petitioned for a writ directing the trial court to grant its motion. The appellate court granted the writ, holding the rounding system lawful.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether employer rounding to nearest quarter-hour violates California law | Rounding is unlawful if it systematically undercompensates employees; a majority of employees losing pay (even small amounts) shows systematic undercompensation | Rounding is facially neutral and lawful if neutral in application and does not systematically undercompensate over time; net effect across employees matters | Rounding lawful where facially neutral and, on net, employees were overcompensated; a bare majority losing small amounts in one facility did not create a triable issue |
| Proper method to evaluate neutrality of a rounding policy | Focus on percentage of employees who lose pay (employee‑percentage approach) | Consider net effect across pay periods and employees (net‑effect approach); fluctuations are expected | Court endorses net‑effect approach (consistent with federal guidance); courts may consider multiple datapoints but net surplus favors employer |
| Applicability of federal rounding regulation (29 C.F.R. §785.48) to state claims | California law should not be read more narrowly than federal regulation | California may follow federal guidance; DLSE adopts federal practice | California courts may look to §785.48; federal interpretation persuasive and applicable here |
| Whether de minimis doctrine needed to decide rounding claims | Plaintiffs: any loss is actionable; de minimis inapplicable | Defendants: losses were trivial per-shift; de minimis may apply | Court did not decide de minimis; ruled on §785.48 compliance and left Troester (de minimis) for Supreme Court resolution |
Key Cases Cited
- Mendiola v. CPS Security Solutions, Inc., 60 Cal.4th 833 (Cal. 2015) (state law requires employers to pay for all time employees are subject to control)
- Corbin v. Time Warner Entm't-Advance/Newhouse P'ship, 821 F.3d 1069 (9th Cir. 2016) (federal rounding regulation permits neutral rounding that averages out over time; not applied per individual pay period)
- See's Candy Shops, Inc. v. Superior Court, 210 Cal.App.4th 889 (Cal. Ct. App. 2012) (California court accepted federal §785.48 framework; rounding lawful if neutral and net effect compensates employees)
- Silva v. See's Candy Shops, Inc., 7 Cal.App.5th 235 (Cal. Ct. App. 2016) (affirmed grant of summary judgment where rounding produced net surplus hours and majority of employees gained or broke even)