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This common payroll practice could be a wage violation in California

On Behalf of | Apr 18, 2024 | Wage and Hour Violations

Wage and hour violations are a common issue for hourly employees. Those paid on a salary basis receive the same wages consistently regardless of how much they work. However, hourly employees receive pay based on the time committed to their jobs each week. Companies are often eager to pay them as little as possible.

One of the ways that companies manage staffing costs is by intentionally minimizing how many hours their workers put in every week. There are a variety of ways that companies may calculate their payroll obligations and seek to minimize what they pay for staffing. Many of these practices are legal, but others may violate federal or California wage laws. For example, a common practice utilized in many states is now potentially a violation of wage rights in California.

Companies shouldn’t round time clock records

Calculating payroll down to the second or minute can be a time-consuming process. Those working in accounting may devote hours every week to converting timekeeping records to accurate paychecks. Companies sometimes streamline that process by rounding time clock records. These companies pay their workers in a specific increment of time. Oftentimes, companies pay workers in five, 10 or 15-minute increments instead of for the exact time they worked. If a worker only puts in three minutes out of a five-minute increment, the employer might round their time records to the next five-minute increment.

This practice has been common for years, but it has recently come under fire. The California courts have found that such practices are no longer necessary given how easy it is to maintain accurate payroll records using digital technology. Additionally, payroll rounding, even when done neutrally and fairly, may lead to workers not receiving pay for all time worked, which is a violation of California’s regulations.

Although employers in other states can use this practice with few complications, employers in California may end up facing wage claims if they continue using time clock rounding practices. The habit of intentionally rounding down more frequently than rounding up is also a payroll violation that could lead to a wage and hour claim. Employees who recognize common wage and hour violations can hold employers accountable for violating their fair pay rights.