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Ninth Circuit Affirms Use of FLSA "Rounding" Rule for Recording Time Worked

    Client Alerts
  • June 08, 2016

For more than a half-century, Department of Labor regulations issued under the Fair Labor Standards Act have allowed employers to adopt an administrative rounding policy to prevent situations where the employer would be required to credit or dock non-exempt employees’ pay if they clock in or clock out a few minutes earlier or later than their scheduled work time. Also known as the “7-Minute Rule,” the regulation permits employers to round the employee’s time to the nearest quarter-hour, under the assumption that over time, the extra time worked will be balanced by the employee not receiving deductions when they arrive a few minutes late or depart work a few minutes earlier than scheduled.

Last month, the Ninth Circuit Court of Appeals rejected a facial challenge to the use of the rounding rule. In Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership, the plaintiff argued that the FLSA rounding rule violated his rights under the law because it could not guarantee that he would be paid for all time actually worked in every pay period. The district court and Ninth Circuit rejected this argument, finding that a neutrally applied rounding policy can apply to all employees even if some individuals lose pay in some workweeks, in comparison to an actual minutes worked calculation.

In addition to its interpretation of the DOL rule’s language, the Ninth Circuit noted that elimination of the rounding rule would cause payroll nightmares for employers, and force them to institute administrative rules requiring employees to precisely clock in and clock out during a 60-second window. This decision represents the affirmation of a long-standing, common sense rejection of an argument that would require employers to provide that their timekeeping policy benefits every employee over every pay period.