On May 2, 2016, the United States Court of Appeal for the Ninth Circuit considered plaintiff Andre Corbin’s federal claim in which he sought $15.02 and one minute of missed pay. Plaintiff claimed that his employer’s policy of rounding hourly employee’s pay to the nearest quarter hour and its failure to compensate him for one minute of time he worked before he clocked in were violations of federal law. While the Ninth Circuit upheld the District Court’s dismissal of plaintiff’s claim, the court also affirmed that an employer’s “rounding policy” violates federal regulations it is not applied in a facially neutral manner. Here, the Court found Time Warner’s rounding policy did not violate federal law as it overpaid plaintiff as often as it underpaid him. The policy, therefore, passed the “facially neutral” standard codified in 29 C.F.R. section 785.48(b). Because Time Warner’s policy “on average, favors neither overpayment nor underpayment” plaintiff was not entitled to recover the $15.02 he claimed to have lost. The Court also found Time Warner’s failure to pay plaintiff the one minute of time to be de minimis” and not a compensable violation of labor laws.
In Corbin v. Time Warner, plaintiff worked as a call center representative for Time Warner. Plaintiff, along with the other call center workers, were required to “clock in” at the beginning of their shifts and “clock out” at the end of their work day. Time Warner rounded employees’ time to the nearest quarter hour. If an employee “clocked in” at 8:07 a.m., for example, the employee’s pay would be “rounded up” and the employee would be paid starting at 8:00 a.m. Similarly, if the employee “clocked out” at 5:05 p.m., the employee’s pay would be rounded down to 5:00 p.m. In the first instance, the employee would be paid for seven minutes that were not worked, and in the second, the employee would lose five minutes that were worked.
“Rounding” of an hourly employee’s pay is permissible under 29 C.F.R. section 785.48(b). The regulation allows an employer to round employees’ “starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour” if the employer’s rounding policy “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.” The regulation does not require mathematical precision – rather, it requires that on “average” the employee is neither paid too much or too little.
In Corbin, plaintiff worked a total of 269 shifts. He was overpaid or broke even 58% of his shifts. However, over a one year period, Corbin lost three minutes of pay which equated to $15.02 in aggregate wages. He claimed that this loss showed that Time Warner’s rounding scheme was not “facially neutral.” The District Court and subsequently the Ninth Circuit disagreed with Plaintiff. The Ninth Circuit, in the “first published decision by a court of appeals addressing the rounding regulation” found Time Warner’s rounding protocol was fair and satisfied the requirements of 29 C.F.R. section 785.58(b) since it both rounded up and rounded down. The Court concluded the purpose of a rounding protocol was to “calculate wages efficiently” without forcing an employer to engage in a “mini actuarial process” for each pay period. As long as an employers’ rounding protocol includes both upward and downward rounding, the rounding procedure will meet the requirements of the C.F.R. and be upheld.
The Court also rejected plaintiff’s claim seeking damages for the one minute of pay he lost when he clocked in too early. The Court held that while it was undisputed plaintiff was not paid for the one minute, he was not entitled to compensation under the United State’s Supreme Court’s holding in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946) which held that “in light of the realities of the industrial world,” the loss of a “de minimis” amount of time does not constitute a violation of the Fair Labor Standards Act. To determine whether compensable time is properly classified as de minimis, the Ninth Circuit established a three-prong test, “instructing courts to ‘consider (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.” (See Lindow v. United States, 738 F.2d 1057 (9th Cir. 1984). Under Lindow, there is no “precise” definition of what constitutes a “de minimis amount of time.” However, according to the Court, “most courts have found daily periods of approximately 10 minutes” of lost time is acceptable. Here, plaintiff’s one minute of lost time was “far less than” that standard and therefore not compensable.
In rejecting Corbin’s claim, the Court’s extremely detailed and lengthy opinion reinforces the multitude of lower court decisions approving neutral rounding protocols to compensate hourly employees. The Court repeated several times in its opinion that rounding is intended to streamline an employer’s payment of hourly employees and that its payments do not have to be “exact to the penny” as long as on balance the employee is over paid roughly as often as underpaid. The case creates a solid bright line for employers of hourly employees – as long as employers’ policies include both rounding up and rounding down, and do not exceed a quarter of an hour in either direction, the fact that an employee shows a minimal loss in payment will not by itself constitute a violation of fair payment statutes.
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