One of the top stories featured on Employment Law This Week: The U.S. Court of Appeals for the Ninth Circuit reaffirms an employer’s time-rounding practice. A call-center employee in California recently brought a class action lawsuit against his employer for time-rounding practices. The employee claims that the policy caused him to be underpaid by a total of $15 over 13 months. Relying on a California Court of Appeals precedent, the Ninth Circuit found that the company’s facially neutral rounding policy—one that rounds time both up and down—is legal under California law. The employee also argued that he was denied payment for a total of one minute when he logged into call software before he clocked in. The Ninth Circuit found that the de minimis doctrine applied in this case, because identifying a single instance in order to provide payment would create an undue burden on the employer.

View the episode below or read more about this story in a previous blog post.

Clock FaceOn May 2, 2016, the Ninth Circuit issued a published opinion in Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership. The Corbin Court best summarized the action in its opening sentence: “This case turns on $15.02 and one minute.” The “$15.02” represented the wages the plaintiff claimed he lost over a period of time as a result of the company’s neutral time-rounding policy. And the “one minute” represented the amount of off-the-clock time that the plaintiff worked, which the Court held was de minimis and, therefore, not compensable.

Federal and California authorities have found that an employer complies with the law if it has a facially neutral time rounding policy – one that rounds time both up and down – and if, in practice, the policy is also neutral.

In Corbin, there was no dispute that Time Warner had a facially neutral rounding policy. Rather, Corbin argued that rounding was only permissible under circumstances that would create undue burdens on employers.

Following the California Court of Appeal’s decision in See’s Candy Shops, Inc. v. Superior Court, the Ninth Circuit rejected the employee’s argument that rounding violates California law that requires employees to be paid all wages due for each pay period where the employer does not engage in a “‘mini actuarial process at the time of payroll’ and reconcile the rounding with actual time punches.” The Court held that such a view was too short-sighted: “Employers use rounding policies to calculate wages efficiently; sometimes, in any given pay period, employees come out ahead and sometimes they come out behind, but the policy is meant to average out in the long-term.” The Ninth Circuit also found that such an interpretation would render rounding practices useless because “employers would have to ‘un-round’ every employee’s time stamps for every pay period to verify that the rounding policy had benefitted every employee.”

The employee’s records in Corbin demonstrated that sometimes rounding worked in his favor, and sometimes it did not. The Ninth Circuit determined that is exactly how rounding is intended to work and, thus, found that the company’s time-rounding practice was neutral in its application.

Also at issue in the case was the de minimis doctrine, which permits the non-payment of wages when the employer meets a three-prong test where courts are instructed to “consider (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.”

The plaintiff if Corbin – a call center employee – claimed that on one occasion he logged into call software before he clocked in for timekeeping purposes, although at all other times he clocked in before starting the program. The employee claimed that Time Warner should have known about this one-time log-in issue and compensated him for it because it had access to the records. The Ninth Circuit rejected this assertion: “Corbin’s contention that the de minimis doctrine does not apply because [Time Warner] could ascertain the exact log-in/out times by scouring its computer records is baseless; the de minimis doctrine is designed to allow employers to forego just such an arduous task.”

The Ninth Circuit also found that Corbin’s proposed standard would require employers to undermine their policies “prohibiting off-the-clock work by proactively searching out and compensating violations.” And because there was only one minute at issue and it was an irregular practice, the de minimis doctrine applied.

The Ninth Circuit’s opinion reaffirms the long-standing practice of rounding employees’ time so long as it is done in an even-handed manner. The Corbin Court’s opinion also confirms that employers are not required to scavenge through their records to ensure that any off-the-clock work did not occur, and that they need not compensate employees for de minimis time.

By Evan J. Spelfogel

In recent years employees have asserted claims for time allegedly worked away from their normal worksites, on their Blackberries, iPhones or personal home computers.  Until now, employers have been faced with the nearly impossible task of proving that their employees did not perform the alleged work.  The US Department of Labor and plaintiffs’ attorneys have taken advantage of the well-established obligation of employers to make and maintain accurate records of the hours worked by their non-exempt employees, and to pay for all work “suffered or permitted” to be performed.

Now, the United States Court of Appeals for the Tenth Circuit has issued a decision holding that an employer is shielded from an employee’s FLSA overtime claim where it has an automated time keeping system that the employee failed to utilize, to report the hours allegedly worked at home.  Frank Brown v. ScriptPro LLC, Case No. 11-3293 (10th Cir. Nov. 27, 2012).

The three judge panel held that a plaintiff has the burden of proving that he performed work for which he was not properly compensated, citing earlier Tenth Circuit and US Supreme Court precedent:  Baker v. Barnard Construction Co., Inc., 146 F 3d. 214, 220 (10th Cir. 1998); Anderson v. Mt. Clements Pottery Co., 328 US 680, 687 (1946).  It was plaintiff’s burden, the Tenth Circuit held, to produce evidence to show the actual amount and extent of his work.

Here, the Court held, plaintiff had failed to set forth the specific facts showing there was a genuine issue for trial, and granted the company’s summary judgment motion. 

In so doing, the Tenth Circuit acknowledged that plaintiff had produced to the district court in opposition to the company’s motion for summary judgment, “uncontroverted evidence that he actually worked overtime.”  This evidence, the Appeals Court said, included plaintiffs own testimony, his wife’s testimony and certain discussions between plaintiff and one of his supervisors concerning plaintiff’s work at home. 

However, plaintiff failed to show the actual amount of overtime by any justifiable or reasonable inference. 

The key to the Tenth Circuit’s decision was that ScriptPro kept accurate records of employees’ time worked, and had installed an automated recordkeeping system that allowed employees to access the timekeeping system from home and enter their daily time onto that system.  The burden on individual employees to show the amount of overtime worked is only relaxed, the Tenth Circuit held, where an employer fails to keep accurate records. 

In this case, the Court held, there was no failure by ScriptPro to keep accurate records, only a failure by plaintiff to comply with ScriptPro’s timekeeping system.  In summary, the Court concluded, where the employee fails to report time to the employer through the established overtime recordkeeping system, the failure by an employer to pay overtime is not an FLSA violation. 

In view of the Tenth Circuit’s ScriptPro decision, employers should review their recordkeeping and timekeeping systems, and may be well advised to implement systems that allow employees to enter asserted home work time into the systems directly.  Of course, this will require monitoring by employers to ensure employee accuracy and honesty in time reporting. 

Many employers utilize employee time recording systems for employees who spend significant amounts of their workdays away from a centralized jobsite.  Such a system could be easily be adapted to include time reporting for employees who legitimately spend time working from home or at other remote jobsite locations. 

The remedy historically available to employers where employees assert they are working unauthorized overtime hours (against company policy or in direct and flagrant disregard of orders from supervisors) has been to discipline the employee and, if necessary, terminate the employment relationship – but the employer has always been required to pay for the asserted overtime work. 

The Tenth Circuit’s ScriptPro decision is a wakeup call to employers to review their timekeeping systems and, where appropriate, to implement new techniques that would apply to employees allegedly working at home.