​(January 24, 2012) At the request of the California Chamber of Commerce, the California Supreme Court has ordered a review of a trial court decision to clarify whether rounding employees’ timecard entries is legal.

Previously in October 2011, CalChamber urged the 4th District Court of Appeal to grant a petition by See’s Candy Shops, Inc. to review a San Diego County Superior Court decision that the practice of rounding employee time entries to the nearest six minutes violates California law.

Until recently, employers have had no reason to suspect that rounding time entries might be unlawful, the CalChamber said in its “friend-of-the-court” letter. For many years, employers have relied on the position of the U.S. Department of Labor (DOL) and state Division of Labor Standards Enforcement that rounding is a lawful practice, the letter states.

That approval is reflected in DOL regulations and the California Labor Commissioner’s enforcement policy, which follows the DOL regulations.

The issue of rounding time entries is a matter of widespread concern to California employers. The CalChamber regularly receives inquiries from its members concerning the rounding of time entries. Clarifying this issue will be very helpful to California employers and help prevent litigation.

After extensive research, the CalChamber concluded that the California Labor Code does not prohibit rounding and no California appellate decision has held that rounding is illegal.

Class Action Lawsuits

Nevertheless, some class action lawsuits already have been filed in California by plaintiffs alleging that rounding is illegal and seeking damages and penalties under the Private Attorneys General Act (PAGA).

The CalChamber is concerned that the trial court decision in the See’s case may lead to the filing of many more class action lawsuits attacking rounding practices that employers have believed were completely lawful.

Many employers will feel they have no choice but to stop their practice of rounding time to avoid the risk of class litigation, which often leads to large settlements due to the costs of defending these cases, the CalChamber states in the letter.

Employers Need Certainty

The filing of class actions alleging novel legal theories and designed to result in large settlements is bad for the California economy and encourages businesses to leave the state, the CalChamber tells the court.

The CalChamber believes it would be best for this issue to be resolved now so California businesses will have certainty regarding this important timekeeping issue.

Staff Contact: Erika Frank