Many employers have for years employed the practice of time-clock rounding. This is a practice of rounding time entries by employees to the nearest five-minute, six-minute, or 15-minute interval. This practice is lawful under the federal Fair Labor Standards Act (FLSA) as long as it is applied neutrally and in a fashion which does not tend to underpay employees. Generally, this means employers need to both round up and round down.
Employers (and lawyers) in California and Oregon have assumed the practice was also lawful under state law, as both California and Oregon generally follow federal wage and hour laws in the absence of state laws to the contrary. Nothing in California or Oregon statutory or regulatory law prohibits time-clock rounding, and the assumption was that it was lawful in both states.
Very recent decisions out of the California Court of Appeals and the U.S. District Court for the District of Oregon, however, have called time-clock rounding into question. The courts in Camp v. Home Depot and Eisele v. Home Depot both held that the practice is likely not lawful under state law in those states, particularly when there is a timekeeping system in place that permits employers to precisely track how much time employees work. State law requires an employee to be paid for all hours worked. Over time, for a large number of employees, the rounding practice may result in a situation where the amount paid is as large as or greater than what would be paid if each...
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