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Ninth Circuit Approves Neutral Rounding of Employee Time Clock Punches

By Emily Erdman

Both federal and California agencies have long permitted employers to round employees’ start and stop work times to the nearest quarter-hour, so long as such policies are applied in a neutral manner.   Despite the widespread use of rounding, the legality of this practice in the Ninth Circuit remained unsettled.   On May 2, 2016 the Ninth Circuit addressed the issue in Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership, affirming that neutral rounding practices are lawful.

In Corbin, the plaintiff employee claimed that the employer’s timekeeping system, which rounded time entries up or down to the nearest quarter hour, unlawfully denied him compensation for all time  worked.  The court held that Time Warner’s timekeeping policy and use of rounding were valid methods of tracking employee time.  Although the plaintiff suffered a small net loss due to rounding, the evidence indicated he had actually gained compensation during other time periods, and this pattern of gains and losses proved that Time Warner’s method was neutral both facially and as applied.

Dismissing the suit, the court took a common-sense stance towards rounding and emphasized that the primary issue is not whether an individual employee loses or gains time in a discrete time period, but rather whether the employer’s policy is intended to average out all employees’ gains and losses in the long-term.   The court made clear that the purpose of rounding is to allow employers a practical and neutral method of recording time without turning to tortuous timekeeping and accounting calculations.   However, a rounding policy which, for instance, solely rounded time punches down would likely be invalid. 

In light of the Ninth Circuit’s decision, employers currently utilizing timekeeping methods which round employees’ punch times may breathe a collective sigh of release.   We recommend that employers routinely audit their timekeeping methods to ensure that such practices are neutral in theory and in application.  Towards that end, rounding policies must round both up and down and must not serve to consistently benefit the employer over a period of time.