Camp v. Home Depot U.S.A., Inc.

Facts

Home Depot used the “Kronos” electronic timekeeping system to record hourly employees’ punches — shift start, shift end, and meal breaks — “to the minute.” (Camp, supra, 84 Cal.App.5th at p. 645, rev. granted.) For payroll, however, each employee’s total shift time was rounded to the nearest quarter hour: “a time increment of seven minutes or less is rounded down to the nearest quarter hour, while a time increment of eight minutes or more is rounded up to the next quarter hour.” A recorded shift of six hours and three minutes paid as 6.00 hours; six hours and eight minutes paid as 6.25. (Id. at pp. 645–646.)

Delmer Camp and Adriana Correa filed a putative class action alleging that this rounding practice failed to pay employees for all time actually worked, pleading unpaid minimum and overtime wages under Labor Code section 510 and the applicable wage order, plus unfair competition. (Camp, supra, 84 Cal.App.5th at p. 645, rev. granted.) The parties stipulated to an analysis of a ten percent sample of time and pay records — 13,387 hourly employees, 4,282,517 shifts, 516,193 pay periods. The results captured rounding’s two faces. In the aggregate, sampled employees were paid for 339,331 more minutes than actual worktime; employees gained minutes in 49.2 percent of pay periods, lost minutes in 47.1 percent, and broke even in 3.7 percent. (Id. at p. 646.) But the individual pictures diverged: Correa neither gained nor lost in the aggregate, while Camp — over 1,240 shifts between March 2015 and October 2020 — “suffered a total net loss of 470 minutes, or approximately 7.83 hours, due to rounding.” (Ibid.)

The governing standards were undisputed. Wage Order No. 7 defines “hours worked” as “the time during which an employee is subject to the control of an employer,” including “all the time the employee is suffered or permitted to work” (Cal. Code Regs., tit. 8, § 11070, subd. 2(G)); it requires minimum wages “for all hours worked” (id., subd. 4(A)) and overtime “for all hours worked” beyond the daily and weekly thresholds (id., subd. 3(A)). Labor Code section 510, subdivision (a) commands premium pay for “[a]ny work” beyond eight hours a day or 40 a week. (Camp, supra, 84 Cal.App.5th at pp. 648–649, rev. granted.)

Procedural history

Home Depot moved for summary judgment: its rounding policy was neutral on its face, neutral as applied, and lawful under See’s Candy; Correa, who lost nothing, lacked any claim. (Camp, supra, 84 Cal.App.5th at pp. 645–646, rev. granted.) The trial court agreed, finding the policy “is neutral on its face and is used in such a manner that it will not result, over a period of time, in failure to compensate employees properly for all the time they have actually worked,” and observing that under Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, it was “not free to disregard binding appellate authority.” (Camp, at pp. 644, 646–647.) Notably, the trial court ruled one day before the Supreme Court decided Donohue v. AMN Services, LLC (2021) 11 Cal.5th 58. (Camp, at p. 655.)

On appeal, Correa conceded she was overpaid and could state no claim; her appeal was dismissed as abandoned. (Camp, supra, 84 Cal.App.5th at pp. 644, 647, rev. granted.) The Sixth District reversed the judgment against Camp and directed entry of a new order denying summary judgment as to him, with costs to Camp. (Id. at p. 661.) Home Depot petitioned for review, and the Supreme Court granted the petition on February 1, 2023 (S277518). The matter remains pending.

Issue

As the panel framed it: whether a triable issue of material fact exists on Camp’s unpaid-wage claims “where Home Depot could capture and did capture the exact number of minutes that Camp worked each shift but, due to Home Depot’s quarter-hour time rounding policy, Camp was not paid for all the time he worked according to Home Depot’s own timekeeping records.” (Camp, supra, 84 Cal.App.5th at p. 649, rev. granted.) Beneath that summary-judgment question sits the doctrinal one: does the See’s Candy neutral-rounding standard remain good law where exact worktime is captured?

Holding

Reasoning

The See’s Candy baseline. The panel began where every rounding case begins. See’s Candy — also a Kronos case, with nearest-tenth rounding — held that “the rule in California is that an employer is entitled to use the nearest-tenth rounding policy if the rounding policy is fair and neutral on its face and ‘it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.’” (Camp, supra, 84 Cal.App.5th at p. 651, rev. granted, quoting See’s Candy, supra, 210 Cal.App.4th at p. 907.) That rule rested on a federal regulation (29 C.F.R. § 785.48(b)) and the DLSE’s adoption of it, and a decade of Court of Appeal decisions followed it, including AHMC Healthcare — which sustained a quarter-hour policy even though “a bare majority” of employees at one location lost time — and David v. Queen of Valley Medical Center. (Camp, at pp. 650–652.)

Troester changed the interpretive climate. In Troester v. Starbucks Corp. (2018) 5 Cal.5th 829, the Supreme Court refused to import the federal de minimis rule into California law, reasoning that section 510 and the wage orders “contemplate[] that employees will be paid for all work performed,” that the California scheme “is indeed concerned with ‘small things,’” and that “a few extra minutes of work each day can add up.” (Camp, supra, 84 Cal.App.5th at pp. 652–654, rev. granted, quoting Troester, at pp. 840, 844, 847.) Troester also flagged the technology point: employers “are in a better position than employees to devise alternatives,” and a “fair rounding policy” appears in Troester only as a fallback for circumstances where “neither a restructuring of work nor a technological fix is practical.” (Camp, at pp. 644, 654–655, quoting Troester, at p. 848.)

Donohue put See’s Candy expressly in play. Donohue barred rounding outright in the meal-period context — and, critically for Camp, the Supreme Court there “expressly stated” that it “has never decided the validity of the rounding standard articulated in See’s Candy.” (Camp, supra, 84 Cal.App.5th at pp. 655–656, rev. granted, quoting Donohue, supra, 11 Cal.5th at p. 72.) Donohue also questioned rounding’s reason for existing: technological advances let employers track time precisely, the system there “actually had to take the extra step of converting the unrounded time punches to rounded ones,” and “[a]s technology continues to evolve, the practical advantages of rounding policies may diminish further.” (Camp, at p. 656, quoting Donohue, at pp. 73–74.)

The four-step analysis. Against that backdrop the panel gave four reasons why Home Depot’s showing failed. First, the Labor Code and Wage Order No. 7 “contemplate[] that employees will be paid for all work performed” — and the record showed Camp was not. (Camp, supra, 84 Cal.App.5th at pp. 656–657, rev. granted.) Second, the scheme is “concerned with ‘small things’”: minutes lost to a “purportedly neutral” policy add up, and here they added up to more than seven hours. (Id. at p. 657.) Third — the doctrinal core — the federal rounding regulation requires only that rounding average out as to “employees” as a whole, not as to any individual; California has nothing like it: “there is not merely a difference in language, but a complete absence of language, in the Labor Code or in the applicable wage order, authorizing time rounding that results in the underpayment of an individual employee for all time worked, where the employer can capture and has captured the employee’s worktime in minute increments.” (Id. at pp. 657–658.) Adapting Troester’s anti-importation reasoning, the panel found no evidence the IWC or Legislature ever intended to adopt a rounding exception. (Id. at p. 658.) Fourth, the Supreme Court has “called into question the efficiencies historically attributed to time rounding”; here, as in Donohue, it was “not clear that any efficiencies were gained” by capturing exact minutes and then rounding them away. (Ibid.)

Home Depot’s justifications, each rejected. The employer defended rounding as producing verifiable, decipherable wage statements (6.25 hours rather than 6.1666); the court answered that “Home Depot cites no provision in California law that privileges arithmetic simplicity over paying employees for all time worked.” (Camp, supra, 84 Cal.App.5th at pp. 658–659, rev. granted.) Home Depot argued rounding “smooth[s] out” punches that may not reflect actual work (the personal phone call while on the clock); the court found no supporting evidence — and pointed to Home Depot’s own Kronos procedures, which instruct that “[a]s a rule, you should not delete punches from timecards because they represent actual times that associates started and stopped working.” (Id. at p. 659.) And the “convenient standard” cases (Oman v. Delta Air Lines; Wage Order No. 7’s “measured by time, piece, commission, or otherwise”) do not help an employer that chose to pay by the hour: nothing in them “indicates that an employer may round captured work minutes where it results in the failure to pay an employee for all minutes worked.” (Id. at pp. 659–660.)

The express invitation. Acknowledging that neutral rounding had been treated as “well settled for nearly a decade,” the panel closed by inviting the Supreme Court to “decide[] the validity of the rounding standard articulated in See’s Candy” in the capture-capable circumstance, and more broadly to “provide guidance on the propriety of time rounding by employers, especially in view of the ‘technological advances’ that now exist.” (Camp, supra, 84 Cal.App.5th at pp. 660–661, rev. granted.)

Justice Wilson’s concurrence: say the quiet part. Justice Wilson agreed with the disposition but wrote separately to call the decision what he believed it was — “a clear departure from See’s Candy” — and to argue the departure is compelled by California law. (Camp, supra, 84 Cal.App.5th at p. 661, rev. granted (conc. opn. of Wilson, J.).) For Wilson, “[t]he appropriate focus for courts must be whether a particular employee was underpaid as a result of the rounding system at issue” (id. at p. 663); a practice “that condones the underpayment of any employees’ wages merely because, on average, as many or more employees are either fully compensated or overpaid by that same practice is unlawful” (id. at p. 666). He would reject the DLSE’s adoption of the federal rounding rule outright — an underground regulation never subjected to the APA (id. at pp. 665–666, citing Tidewater) — reasoned from Armenta v. Osmose, Inc.’s each-hour (not averaging) construction of the minimum wage laws (id. at pp. 666–667), and answered the acquiescence argument with Naranjo: legislative inaction is a “weak reed” (id. at pp. 668–669). His bottom line sharpened the equities: had Camp quit in October 2020, the 7.83 lost hours “would be forever lost to him.” (Id. at p. 664.)

Significance

Camp is the vehicle by which the California Supreme Court will finally decide whether neutral time rounding — an employer practice blessed by the Courts of Appeal since 2012 but never endorsed by the high court — survives in the age of to-the-minute timekeeping. The grant of review (Feb. 1, 2023, S277518) makes the opinion persuasive-only for now, but its analytical move matters regardless of outcome: it reads Troester (all work performed; small things count) and Donohue (no rounding for meal periods; efficiencies questioned) as having hollowed out See’s Candy’s premise wherever the employer’s own system captures actual minutes. On that reading, the federal averaging regulation has no California analog, and a policy that underpays an identifiable employee — even 470 minutes across five years — creates a triable claim.

The decision also crystallizes a genuine conflict. See’s Candy, AHMC Healthcare (upholding a policy under which a majority at one site lost time), David, and the Ninth Circuit’s Corbin all evaluate neutrality at the workforce level; Camp and Justice Wilson’s concurrence insist the unit of analysis is the individual employee. That is precisely the kind of split rule 8.1115(e)(1) lets litigants cite Camp to establish while review pends. Note the boundaries on both sides: Camp disclaims any holding that all rounding is unlawful, reserves the legacy contexts (genuine inability to capture minutes), and reserves whether capture-capable employers must capture. (84 Cal.App.5th at p. 644, rev. granted.) Whatever the Supreme Court does with See’s Candy, Donohue’s meal-period rounding bar and Troester’s de minimis holding stand on their own and already govern.

For the docket-watcher: Camp has now been pending more than three years — long enough that the practical rules of the road (below) have themselves become settled practice. Our standing survey of matters awaiting decision tracks it alongside the rest of the wage-and-hour docket; re-verify status before any filing that leans on it.

Key quotes

“[I]f an employer, as in this case, can capture and has captured the exact amount of time an employee has worked during a shift, the employer must pay the employee for ‘all the time’ worked.” (Camp, supra, 84 Cal.App.5th at p. 660, rev. granted Feb. 1, 2023, S277518.)

“Here, there is not merely a difference in language, but a complete absence of language, in the Labor Code or in the applicable wage order, authorizing time rounding that results in the underpayment of an individual employee for all time worked, where the employer can capture and has captured the employee’s worktime in minute increments.” (Camp, supra, 84 Cal.App.5th at pp. 657–658, rev. granted.)

“The appropriate focus for courts must be whether a particular employee was underpaid as a result of the rounding system at issue.” (Camp, supra, 84 Cal.App.5th at p. 663, rev. granted (conc. opn. of Wilson, J.).)

Read the full opinion (Justia) →

Practice pointer

Open questions

The biggest question is the case itself: the validity of the See’s Candy standard is squarely before the Supreme Court, on the panel’s own invitation. (Camp, supra, 84 Cal.App.5th at pp. 660–661, rev. granted.) The panel reserved everything beyond its facts: whether rounding practices “in other contexts comply with California law” — including “other circumstances, such as when an employer uses a neutral rounding policy due to the inability to capture the actual minutes worked by an employee” — and “whether an employer who has the actual ability to capture an employee’s minutes worked is required to do so.” (Id. at p. 644.) Unresolved beneath the merits are the workforce-versus-individual unit-of-analysis conflict with AHMC and David; the status of the DLSE’s rounding guidance, which Justice Wilson would discard as an underground regulation (id. at pp. 665–666 (conc. opn. of Wilson, J.)); and remedial questions the opinion never reaches — wage-statement and waiting-time derivatives of rounding losses among them. And because the grant of review froze the citability of a decade of rounding precedent in place, the Supreme Court’s disposition will determine not just Camp’s fate but whether See’s Candy, AHMC, and David remain the law at all.