Wage & Hour Counsel : Wage & Hour Lawyer & Attorney : Littler Mendelson Law Firm : Employment Law, Labor Relations

See’s filed a writ of mandate with the Court of Appeal, Fourth Appellate District, which was denied. See’s subsequently petitioned for review with the California Supreme Court. That petition was supported by amicus curiae letters from numerous employer groups including the California Chamber of Commerce, Employer’s Group, California Retailers Association, and California Employment Law Council. Those groups urged the California Supreme Court to review the decision because of its importance to California employers, who now face uncertainty with respect to their timekeeping practices.

California employers long have relied on the position taken by the federal Department of Labor (“DOL”), and expressly adopted by the California Division of Labor Standards Enforcement (“DLSE”), that rounding to the nearest one-tenth or one-quarter of an hour is permissible as long as, over a period of time, it does not fail to compensate employees for all hours worked. (See 29 C.F.R. § 785.48(b); DLSE Manual §§ 47.1 and 47.2). In these circumstances, no California appellate court has found rounding to be unlawful, and other federal and state trial courts have upheld the practice.

In briefing, both See’s and employers’ groups warned that if the high court did not intervene, employers would find themselves fighting against a wave of class action lawsuits challenging the validity of rounding practices that employers had in good faith believed were lawful. This would force employers to eliminate rounding practices or face the risk of litigation, which frequently results in large settlements because of the high costs of such litigation.

The California Supreme Court’s order requiring appellate review of the trial court’s decision is welcome news for employers. The issue is one of first impression for the California appellate courts, and the hope is that the Court of Appeal's ruling will clarify for employers whether rounding employee time entries is legal in California.

The opening brief in the Court of Appeal is due on March 5, 2012, with a responsive brief and applications to file amicus curiae briefs due by April 4, 2012.

Photo credit: Ipso frato

The DOL intends to explore updates to this application to make it or similar versions compatible with other smartphone platforms, such as the Android and BlackBerry.

The DOL also has made available a printable work hours calendar for workers who do not own smartphones. This downloadable calendar allows workers to track their rate of pay, start and stop times, and arrival and departure times, and includes information about workers’ wage and hour rights and how to file a wage violation complaint. The new app poses several concerns for employers. First, the app has the potential to create confusion where, for instance, an employer has a permissible time entry rounding system in place. Because the app does not provide for rounding, in such instances, there may be discrepancies between the amount of time recorded by an employee (and the amount of wages calculated by the app to be due) and the employer's time records. Second, the app could potentially be abused by workers who “clock in” on the app before their actual start time, clock out after their actual stop time, or fail to accurately record non-compensable breaks. Employers should be mindful of these potential problems if an employee attempts to present data from the app as “evidence” of improper wage payment. In fact, the app itself includes a disclaimer of which employers and employees should be aware:

Disclaimer: This App is designed as a reference tool. It does not include every possible situation encountered in the workplace. Some situations not addressed in this App may yield a different result in the calculation of total pay. These include, but are not limited to, situations where, for example, the employee is not covered by the Fair Labor Standards Act or is exempt from the minimum wage and/or overtime pay requirements of the FLSA. Further, the conclusions reached by this App rely on the accuracy of the data provided by the user. Therefore, DOL make no express or implied guarantees as to the accuracy of this information.

Notwithstanding the potential issues raised by the app, employees should not be prohibited from using it at work, as its use may constitute protected activity under the Fair Labor Standards Act and similar state wage laws. However, employers may permissibly enforce existing information technology policies regarding the installation of the app on company-provided electronic devices.

Photo credit: Alex Slobodkin

Manuel Barbosa worked as a cell leader supervising a group of up to eight carburetor assemblers for IMPCO Technologies, Inc. After receiving complaints of missing overtime hours from employees he supervised, Barbosa believed he too was owed overtime and informed the company’s payroll administrator about the discrepancy. Barbosa told payroll administrators that he thought there must be something wrong with the time clock. The employees and Barbosa were then credited the overtime hours they sought. Approximately two weeks later, the payroll administrator examined the time cards and determined that no overtime had actually been due. The company’s human resources manager also compared the time cards to a gate scan report and found that employees could not have worked overtime as represented by Barbosa.

Subsequent to the determination that there was nothing wrong with the time clock, human resources, payroll administration and the operations manager called a meeting to discuss the issue of overtime. At the meeting, Barbosa reiterated that he and his employees had in fact worked the extra overtime that he claimed. A week later, Barbosa was terminated for falsifying time records. None of the other employees who received disputed wages was similarly terminated.

In his lawsuit, Barbosa alleged he was terminated because he had made a good faith, albeit mistaken, claim to overtime, not because he had falsified time records. The trial court sided with IMPCO Technologies and found that there was no public policy protecting a mistaken but good faith claim to overtime wages. On appeal, the Fourth District Court of Appeal reiterated that an at-will employee can raise a viable legal claim when his termination violated public policy. The court of appeal then acknowledged that the duty to pay overtime was “a well-established fundamental public policy” and emphasized that an allegation of employer wrong-doing need not be correct to sustain a wrongful termination action.¹ In reversing the trial court’s granting of non-suit to the employer, the court of appeal concluded that Barbosa had presented sufficient evidence (e.g., coworkers’ beliefs that they were owed overtime and errors with previous timekeeping system) to demonstrate that he possessed a reasonable, good faith belief of entitlement to overtime. Accordingly, the court ruled that Barbosa was entitled to a jury determination of whether he had been terminated for asserting his mistaken yet good faith belief that he had a statutory right to overtime or for falsifying time cards. 

This entry was written by Stacey James.

¹ Collier v. Supreme Court, 228 Cal. App. 3d 117 (1991) (employee’s good faith but mistaken belief offered protection from employer retaliation in whistleblower context); Green v. Ralee Engineering Co., 19 Cal. 4th 66 (1998) (employee only needed to prove that termination was due to reasonably based suspicions of illegal activity).

In correspondence with our firm, a representative from the Division clarified that its real disagreement with the U.S. Department of Labor is not with the use of rounding as a general matter, but rather with respect to the period of time that should be considered when evaluating the impact of rounding on an employee. While the U.S. Department of Labor will assess the impact of rounding “over a period of time,” the Division will evaluate the impact of rounding on a week-to-week basis. Thus, if an employee’s time is rounded by seven minutes to the employee’s detriment on the first day of a workweek, the Division will not assert a violation of New Jersey law so long as the employee’s time during the remainder of that workweek is rounded by at least seven minutes to the employee’s benefit (thereby offsetting the negative rounding from the first day).

The Division also confirmed that the use of a “punch window” remains lawful in New Jersey. Under federal law, employees who punch in during a defined period of time prior to the start of their scheduled shift (or who punch out during a several-minute “window” following the end of their scheduled shift) do not need to be paid for the time spent “on the clock” during the punch window so long as they do not engage in any work during that time. In its correspondence to our firm, the Division confirmed as a matter of enforcement policy under New Jersey law that when employees punch in prior to their scheduled starting time (or after their scheduled ending time), the employer may correct the time to the scheduled time “provided the employee was not actually performing work that benefits the employer” during the punch window. The Division recommended that when an employer utilizes a punch window: (a) it should notify employees in writing that no employee will be paid for time punched prior to or after their scheduled work time without the proper authorization of management; and (b) the notice should be printed on the time card and posted at the time clock. Of course, employers who utilize a punch window should also ensure that employees do not perform any work activities before or after their scheduled shift.

This blog post was authored by Robert Pritchard.