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May 2 — A former Time Warner call center employee in California can't proceed with his claim that the company violated federal and state wage laws by rounding work hours to the nearest quarter-hour, the U.S. Court of Appeals for the Ninth Circuit ruled.
This is the first published opinion from a federal appeals court addressing the Labor Department's regulation on permissible rounding under the Fair Labor Standards Act. But district courts have frequently upheld neutral rounding practices.
Andre Corbin alleged he lost $15.02 in compensation over a 13-month period due to a new online time-keeping system's rounding. He alleged in a proposed class and collective action that “any” loss in wages due to rounding violates the FLSA.
But Time Warner Entertainment-Advance/Newhouse Partnership had a neutral time-keeping system that rounded up or down to the nearest quarter-hour without considering whether it benefited the employer or the employee, the Ninth Circuit said May 2 in affirming summary judgment for the company.
“Mandating that every employee must gain or break even over every pay period misreads the text of the federal rounding regulation and vitiates the purpose and effectiveness of using rounding as a timekeeping method,” Judge Jay S. Bybee wrote for the court.
This is a well-reasoned opinion that explains what a neutral policy looks like, an attorney for Time Warner, Joseph W. Ozmer of Kabat Chapman & Ozmer LLP in Atlanta, told Bloomberg BNA May 2.
The ruling provides more clarity to employers about what the federal regulation on neutral rounding policies looks like in practice, Ozmer said.
Counsel for Corbin didn’t immediately respond to Bloomberg BNA’s May 2 request for comment.
Corbin worked for Time Warner as an hourly employee from July 2007 to June 2011, according to the court.
In May 2010, the company moved from using a physical time clock to an online system for tracking employee work hours. The new system rounded the recorded time to the nearest quarter-hour.
An employee who clocked in at 8:07 a.m. would gain seven minutes because the system would round the time to 8:00, the court said as an example. An employee who clocked out at 5:07 p.m. would lose seven minutes because the time would be rounded to 5:00.
Corbin claimed that he lost $15.02 in wages between May 2010 and June 2011 because of the rounding practice. He alleged that if an employee loses any compensation because of rounding, the policy violates the FLSA.
But the appeals court disagreed. “Corbin’s argument, if accepted, would undercut the purpose and would gut the effectiveness of a rounding policy,” it said.
The DOL regulation approves of rounding to the quarter-hour under the FLSA, so long as the employer's policy neutrally rounds up and down, the court said.
A neutral policy such as this favors neither the employer nor the employees because sometimes the employees are paid a little more and sometimes they are paid a little less than they would receive for the exact time worked, the court said.
The regulation is meant to give employers a practical and efficient way to calculate wages that averages out over time, it said.
“Corbin’s preferred interpretation would require employers to engage in the very mathematical calculations that the federal rounding regulation serves to avoid,” the appeals court said.
The court also rejected Corbin's argument that the rounding practice violated California law's requirement that overtime be paid for all hours worked beyond eight in a workday.
Corbin didn't produce any case law showing that California law departs from the federal rounding regulation or that overtime hours are treated differently than regular hours for rounding purposes, the court said.
Judges Diarmuid F. O’Scannlain and Stephen S. Trott joined the opinion.
Eric K. Yaeckel and William B. Sullivan of Sullivan Law Group APC in San Diego represented Corbin. In addition to Ozmer, Joseph S. Carr and Michael D. Kabat of Kabat Chapman & Ozmer in Atlanta represented Time Warner.
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Text of the opinion is available at http://www.bloomberglaw.com/public/document/ANDRE_CORBIN_individually_and_on_behalf_of_other_members_of_the_p.
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