Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) 67 shifts.380 Two company policies provided for adjustments to the timecards: a “rounding” policy and a “grace period” policy.381 Under the “rounding” policy, punches in and out were rounded up or down to the nearest tenth of an hour.382 Under the “grace period” policy, an employee could voluntarily punch in up to 10 minutes before the scheduled start time and punch out 10 minutes after the scheduled end time, but was prohibited from working during these periods.383 If an employee punched into the system during the grace period, the employee was paid based on the scheduled start/stop time, rather than the punch time.384 Plaintiff, a former retail sales employee, sued See’s Candy on behalf of herself and others, claiming that the company’s time-rounding and “grace period” practices failed to compensate employees for all hours worked.385 The company argued that any amounts of unpaid time were de minimis,386 and that the rounding policy and grace period policy complied with federal and state law. The trial court granted summary judgment for the plaintiff and the company appealed.387 The Court of Appeal in See’s reversed, finding both policies to be lawful.388 Citing the federal rounding standard, See’s held that a rounding policy is permissible under California law if it is “fair and neutral” on its face and is “used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.”389 With respect to the grace period policy, the See’s court concluded that the plaintiff failed to produce any evidence showing that employees who clocked in during the grace period were working or were under the employer’s control, and the parties agreed that under California law a grace period is permitted if the employee is not working or is not under the employer’s control.390 Further good news for employers came in 2019 when the California Court of Appeal held that rounding can be “fair and neutral” even where most workers lose pay as a result. In Ferra v. Loews Hollywood Hotel, the plaintiff alleged that employees were underpaid because of a policy that rounded time punches up or down to the nearest 380 Id. at 892. 381 Id. 382 Id. 383 Id. at 892-93. 384 Id. at 893. 385 Id. 386 For discussion of California’s application of the de minimis doctrine, see Section D., infra. 387 Id. at 899. 388 Id. at 907. 389 Id. 390 Id. at 909. In 2016, a California Court of Appeals reiterated this holding in Silva v. See’s Candy Shops, Inc., 7 Cal. App. 5th 235, 253 (2016), when it affirmed defendant’s entitlement to summary judgment on plaintiff’s rounding and grace period claims.
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