Happy Friday. Through my defense of wage claims this year, I found that employers need to establish and periodically review issues pertaining to employees’ timekeeping. This Friday’s Five is a list of the top five timekeeping issues that employers should routinely audit:
1. Establish and communicate a time keeping policy
Employers should establish and regularly communicate a time keeping policy to employees. The policy should set forth that employees always have an open door to complain to their supervisors and other managers or human resources about missed meal and rest breaks, unpaid wages, or unpaid overtime. If employees routinely acknowledge that they understand the time keeping policy and are agreeing to record their time through the employer’s system, this can go a long way in defending any off-the-clock claims.
Employers need to review whether their time keeping system or payroll company is rounding employees’ time. While rounding can be legal under California law, employers must still meet certain requirements to have a compliant rounding practice. In See’s Candy Shops Inc. v. Superior Court, a California court held that the employer’s rounding policy that rounded both up and down from the midpoint of every six minutes was permitted under California law. The employers’ policy did not result in a loss to the employees overtime. Therefore, the court found it to be lawful. Employers need to review:
(1) Do they have a rounding policy?
(2) If they do round, is the policy compliant with the law?
(3) Is a rounding policy necessary or is it easier to pay the exact time the employee clocks in and out?
3. De minimis time
Employers need to review if they are compensating employee for all time worked. The de minimis doctrine may permit employers a defense for claims by employees that they were not compensated for very small amounts of time that are difficult to track. The de minimis doctrine holds that “alleged working time need not be paid if it is trivially small: ‘[A] few seconds or minutes of work beyond the scheduled working hours … may be disregarded.’” Troester v. Starbucks Corporation (this decision is currently under appellate review). More information about the de minimis doctrine can be read here. While this defense may be available to California employers, employers should not rely upon the defense when it is known the employee is working time that is not compensated.
4. Record meal breaks
In addition to recording the start and stop times for employee’s work, employers are required to record when employees take meal breaks. The Wage Orders require that California employers keep “[t]ime records showing when the employee begins and ends each work period. Meal periods, split shift intervals and total daily hours worked shall also be recorded. Meal periods during which operations cease and authorized rest periods need not be recorded.” IWC Wage Order 5-2001(7)(a)(3).
5. Time records
Under Labor Code section 1174, employers are required to keep time records showing the hours worked daily and the wages paid, number of piece-rate units earned by and applicable piece rate paid. These records must be maintained in the state or at the “plants or establishments at which employees are employed.” The records must be kept for at least three years. Labor Code section 1174(d). The statute of limitations for wage claims can extend back to four years, so employers generally keep the records for four years.