Are employers in California allowed to have a timekeeping policy that results in rounding of an employee's time?

Editor's  Note: An Oct. 2022, California Court of Appeal decision calls into question the continued viability of time-rounding policies in California. Employers should seek legal counsel regarding the continuation of rounding practices in California. See California Court Limits Permissibility of Time Rounding.

California has historically adopted and mirrored federal Fair Labor Standards Act (FLSA) time-keeping regulations for rounding hours worked. The adopted standard allows an employer in the state of California to round employee start and end times to the nearest five minutes, one-tenth of an hour or quarter of an hour, and presumes that in doing so, the time that is rounded averages out so that the employees are fully compensated for all the time they actually worked.

Employers must ensure that the practice is fair and neutral, and there must be an equal amount of rounding up and rounding down to ensure the policy is legally defensible and does not violate any other of California wage and hour laws.

It is important to note that rounding practices are not permitted for meal periods. In February 2021, the California Supreme Court decided in Donohue v. AMN Services, LLC, that "The meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective."