Rounding wages is a common practice in some workplaces, even though it doesn’t seem fair. As a result, many workers in California are left wondering whether it is legal—and whether they’re being paid fairly.
The answer is that while rounding is not outright illegal under federal or California law, it must be done in a way that is neutral, fair and does not result in underpayment. When rounding policies favor an employer or consistently shortchange employees, they may violate wage and hour laws.
The basics
Rounding typically occurs when an employer calculates time worked by rounding the clock in set increments—such as to the nearest five, ten or fifteen minutes. For example, if an employee clocks in at 8:56 a.m., and the employer rounds to the nearest ten minutes, the start time may be recorded as 9:00 a.m. If the employee clocks out at 5:04 p.m., the end time might be rounded to 5:00 p.m. These small losses can add up over time, especially if the rounding always cuts against the employee.
California law requires employers to pay employees for all hours worked. The California Division of Labor Standards Enforcement (DLSE) has stated that rounding is only permissible if it averages out over time and does not result in workers losing wages. Courts have also ruled that rounding practices must be neutral. If data shows that employees are consistently losing time due to rounding, an employer’s practice may be found to violate the law.
In recent years, California courts have become more skeptical of rounding policies, especially as digital timekeeping systems have made it easier to track actual hours worked to the minute. Employers now have fewer excuses for using imprecise systems, and courts have shown a greater willingness to side with employees in wage disputes.
If you suspect that your employer’s rounding policy is shortchanging your paycheck, you may have the right to take action. Seeking legal guidance is a great way to learn more.