©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 211 undercompensate employees, the trial court granted summary judgment in favor of the employer on the rounding claim. The Court of Appeal reversed and remanded for further determination, holding that pursuant to Labor Code section 510, employees must be compensated for all time worked. As to the plaintiff who lost time due to the rounding policy, the employer had not paid the employee for over seven hours of work, and this amount of time could not be considered de minimis. The Court of Appeal stated that where employers who “can capture and [have] captured the exact amount of time an employee has worked during a shift, the employer must pay the employee for ‘all the time’ worked …” According to the Court of Appeal, there is “no provision in California law that privileges arithmetic simplicity over paying employees for all the time worked.” On February 1, 2023, the California Supreme Court granted review of Camp v. Home Depot USA, Inc. Given the California Supreme Court’s prior commentary in Donohue regarding rounding, there is risk that the California Supreme Court will significantly restrict—if not eliminate—employers’ ability to use time-rounding policies. In any event, a “rounding” practice should not be confused with an “exception reporting” practice that gives employees a “grace period” to clock in a few minutes before or after the scheduled shift, while simultaneously forbidding any work outside the scheduled shift (subject to expressly authorized exceptions, and subject to the employee indicating the scheduled hours or some expressly different amount of hours were worked each day and week). Under this system, the electronically recorded time would not be the measure of hours worked but rather would serve as a method to confirm attendance.113 California courts have not (yet) rejected this federally approved practice, which can work well with respect to fixed schedules from which deviations are rare and where employees cannot, as a practical matter, perform work before or after the designated shift times. 7.4.5 Overtime premium pay In America generally, employers must pay nonexempt employees at an overtime premium rate (1.5 times the regular hourly rate) only to the extent that they work over 40 hours per week. In California it’s different. Nonexempt employees typically also earn daily overtime—premium pay for work over eight hours a day, and for the first eight hours of work on a seventh consecutive workday in a workweek.114 There is also a premium pay rate of double the regular rate for work performed over 12 hours a day and over eight hours on the seventh consecutive workday in a workweek. These special premiums apply even where the working time does not exceed 40 hours a week. A 2011 Court of Appeal decision recognized that California employers could mitigate some of the harshness of these requirements by a mutual agreement with employees to pay a fixed salary that covers all hours worked, including overtime,115 but in 2012 the California Legislature eliminated this option, forbidding employers to use such agreements.116 Salaried nonexempt employees: fluctuating workweek method for overtime pay calculations not permitted. California law differs from federal law on how to calculate overtime pay for salaried nonexempt employees. Federal law permits employers to use the “fluctuating workweek” method, which recognizes the economic reality that the weekly salary covers all hours worked that week, so that only the overtime “premium” is due for overtime hours. California, by contrast, requires the use of the “fixed workweek” method, which irrebuttably presumes that the weekly salary is paid only for a 40-hour workweek (at most).117 Under this method, both overtime premium and base salary would be due for each overtime hour worked. As shown below, the “fixed workweek” method results in greater liability where employers have misclassified salaried nonexempt employees as exempt.
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