Pamela Silva brought a wage and hour class action complaint against her former employer, See's Candy Shops, Inc. After certifying a class of current and former California employees, the trial court granted Silva's summary adjudication motion on four of See's Candy's affirmative defenses and entered an order dismissing the four defenses. In a writ petition, See's
After we summarily denied the petition, the California Supreme Court granted See's Candy's petition for review and ordered this court to vacate its prior order and issue an order to show cause in the matter. We thereafter issued the order to show cause and the parties filed extensive writ briefing. We also granted requests by several amici curiae to file briefs in the matter.
We conclude See's Candy's petition has merit. Based on the factual record before it, the trial court erred in granting summary adjudication on the two affirmative defenses pertaining to See's Candy's nearest-tenth rounding policy. We order the court to vacate the summary adjudication order and enter a new order denying summary adjudication on See's Candy's 39th and 40th affirmative defenses. Our ruling leaves open the issue whether the parties will prevail in proving their various claims and defenses relating to See's Candy's nearest-tenth rounding policy and a related grace period policy.
See's Candy uses a timekeeping software system, known as Kronos, to record its employee work hours. Employees are required to "punch" into the system (located in the back room of each See's Candy store) at the beginning and end of their shifts, as well as for lunch breaks. A Kronos punch shows the actual time (to the minute) when the employee punched into the system. During the relevant times, See's Candy calculated an employee's pay based on his or her Kronos punch times, subject to adjustment under two policies: (1) the nearest-tenth rounding policy and (2) the grace period policy.
Under the nearest-tenth rounding policy, in and out punches are rounded (up or down) to the nearest tenth of an hour (every six minutes beginning with the hour mark). The Kronos time punches are thus rounded to the nearest three-minute mark. For example, if an employee clocks in at 7:58 a.m., the system rounds up the time to 8:00 a.m. If the employee clocks in at 8:02 a.m., the system rounds down the entry to 8:00 a.m.
Under the separate grace period policy, employees whose schedules have been programmed into the Kronos system may voluntarily punch in up to 10 minutes before their scheduled start time and 10 minutes after their scheduled end time. Under See's Candy's rules, employees are not permitted to work during the grace period, but they are permitted to punch in early (or punch out late) and use the time for their own personal activities. Because See's
See's Candy employed Silva in a nonexempt hourly position from about 1993 to 2010. In October 2009, Silva filed a class action complaint. As amended, the complaint alleged See's Candy violated various California wage and hour laws, including by failing to: (1) pay for all work performed; (2) pay overtime compensation, (3) maintain lawful meal and rest period policies; (4) pay for each meal or rest period that was not provided; and (5) provide accurate itemized wage statements. Silva also alleged See's Candy's labor practices constituted an unfair business practice under Business and Professions Code section 17200 and violated Labor Code section 2698 et seq.
The court thereafter certified a class of "All persons employed by See's Candy ... in ... California as non-exempt, non-union employees at any time ... from October 20, 2005 to the present, with respect to Plaintiff's claims that See's time-stamping policies (rounding policy and grace period policy) are illegal under California law." The court certified the class on two separate issues: (1) "Whether class members suffered a loss of compensation when they clocked in and out on the Kronos timekeeping system utilized by See's [Candy] which rounded time to the nearest six minutes" (the nearest-tenth rounding policy), and (2) "Whether class members suffered a loss of compensation when they clocked in or out on the Kronos timekeeping system utilized by See's [Candy] during the `grace period,' defined as up to ten minutes before their scheduled start times and up to ten minutes after their scheduled quitting times" (the grace period policy).
In its amended answer, See's Candy denied Silva's allegations and asserted 62 affirmative defenses, including defenses based on See's Candy's claim that: (1) any unpaid amounts are de minimis; (2) the nearest-tenth rounding policy is consistent with federal and state law; and (3) the grace period policy is lawful under federal and state law.
In moving for summary adjudication on the nearest-tenth rounding defenses, Silva argued there is no California statutory or case authority allowing See's Candy to use a rounding policy, and its policy violates section 204, which generally requires an employer to pay an employee "All wages" every two weeks, and section 510, which requires an employer to pay an employee premium wages for "Any work" after eight hours per day or 40 hours per workweek.
To show the defenses lacked factual merit, Silva relied primarily on three paragraphs in a 2010 report by See's Candy's expert, Dr. Ali Saad, a labor economist and statistician, who was initially retained to analyze the impact of See's Candy's nearest-tenth rounding policy for purposes of the earlier class certification motion. Because the proposed class at that point consisted only of retail (and not administrative) employees, Dr. Saad analyzed only the retail employee time records.
In the portions of Dr. Saad's declaration relied upon by Silva, Dr. Saad concluded: "[From] October 2005 through March 2010 for all hourly [See's Candy] employees in California, ... [¶] [t]he total impact of rounding actual time punches to the nearest tenth of an hour for all shifts worked ... produced a net surplus of rounded over actual shifts of 2,230 employee work hours [which] ... resulted in a net economic benefit to the employees as a group.... Per shift the rounded shifts exceeded actual shifts by on average.002 hours, which is equal to 0.12 minutes, or 7 seconds per employee, per shift." (Italics added.) However, for plaintiff Silva, Dr. Saad found an "aggregate shortfall" of .47 hours or 28 minutes, which he said "equates to a shortfall in the average rounded relative to actual shift of 2 seconds." Silva also relied on Dr. Saad's graph depicting the distribution of the difference in shift lengths calculated based on the original time punches and on the
Silva additionally relied on the deposition testimony of Mary Ann Mazelin, designated by See's Candy as the person most knowledgeable. When asked whether See's Candy had performed any investigation to determine whether, using the rounding rules, the employees are paid for all the time they actually work, including overtime, Mazelin responded: "I am not aware. I do not believe See's has made any investigation, using your term, for that. However, I have done my own analysis for Pam Silva for the last year comparing actual time clocked in recorded by See's to what Kronos calculates and therefore she ends up being paid."
Silva also relied on exhibit N, which consisted of a series of charts which Silva said reflected that See's Candy's rounding practices resulted in her loss of $725 in wages. Silva did not include any foundational or authentication evidence explaining the nature of the charts, including who prepared them and/or the manner in which they were prepared.
In opposing the motion, See's Candy urged the court to adopt a federal regulation utilized by California's Division of Labor Standards Enforcement (DLSE) that allows employers to compute employee worktime by using a nearest-tenth rounding method "provided that 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." (29 C.F.R. § 785.48(b) (2012), italics added.) See's Candy argued that Silva had not met her summary adjudication burden under this rule, noting that Silva had not presented any competent evidence that the rounding method prevented the class members from being fully compensated for their work.
See's Candy alternatively argued that even if the court found Silva presented sufficient evidence to shift the burden of proof, the summary adjudication motion should be denied because there are triable issues of fact on its nearest-tenth rounding policy affirmative defenses. In support, See's Candy relied on Dr. Saad's 2010 report, in which Dr. Saad concluded that a majority of the employees had a small net gain from the nearest-tenth rounding policy and that "mathematically, over a period of time, rounded times and actual times would even out." See's Candy also presented Dr. Saad's updated report, which was consistent with his 2010 report, but expanded the period of coverage to April 2011 and also included hourly employees who worked in See's Candy's administrative office locations. In the report Dr. Saad included additional analysis supporting his finding that the nearest-tenth rounding policy was neutral over time, even when taking into
In his 2011 report, Dr. Saad stated that in analyzing the Kronos time records, he first applied See's Candy's grace period policy if the time records showed the employee punched in within 10 minutes before or after his or her scheduled start/stop times. In other words, if an employee punched in during this 10-minute period, Dr. Saad would assume the employee was not working during this time and instead was working from the scheduled start time or until the scheduled end time. In this circumstance, Dr. Saad assumed the employee would be paid from the scheduled start/end time and thus See's Candy would have no need to apply the nearest-tenth rounding policy because the employee's worktime would have started and/or ended precisely at the scheduled start/stop time.
Dr. Saad then computed the hours worked for each employee shift by comparing the actual (unrounded) time stamps and the rounded time stamps, and then determining the difference for each of the shifts. Based on this mathematical analysis, Dr. Saad found that with respect to the entire class, See's Candy's nearest-tenth rounding policy: (1) "is both mathematically and empirically unbiased"; (2) resulted in a total gain of 2,749 hours for the class members as a whole; and (3) "did not negatively impact employees' overtime compensation" as neither employer nor employee benefited with respect to overtime pay.
Breaking down the 2,749-hour net gain for the class members as a whole, Dr. Saad prepared a chart showing that as a result of See's Candy's nearest-tenth rounding policy: 59.1 percent of the class (5,335 employees) had a net gain; 33 percent of the class (2,982 employees) had a net loss; and 7.9 percent of the class (717 employees) had no change. Based on his analysis, Dr. Saad concluded that See's Candy's nearest-tenth rounding policy is not "biased against employees in any way.... From a mathematical perspective ... the methodology of rounding to the nearest tenth of an hour for pairs of punches is exactly neutral. The fact that the results came out in favor of the employees in this data is meaningless — the extremely small excess amount could have been a minutely small shortfall with a different sample of data." (Italics omitted.)
In his 2011 report, Dr. Saad also modified his earlier conclusion with respect to plaintiff Silva based on his analysis of her entire employment period and not just the class period, and found that Silva was fully compensated for all of her worktime. Specifically, Dr. Saad found: (1) Silva received a net benefit of five seconds per shift because of the nearest-tenth rounding policy for a total net benefit of 111 minutes, which out of 10,000 hours is
In addition to Dr. Saad's reports, See's Candy presented evidence that it maintained a policy prohibiting employees from performing any work during the grace period, the employees were periodically reminded of this policy, and employees were told that if they worked during this time they must notify the manager who would manually add time to the employee's Kronos records. See's Candy also presented declarations from numerous employees, each of whom explained that he or she was aware of the grace period policy, understood that the decision to use the policy is "always voluntary," and described the types of personal activities in which he or she engaged during this period, including using the restroom "to do my makeup or hair," going to the post office to drop off personal mail, "go[ing] across the street to the [drugstore]," and "play[ing] games on my cell phone."
See's Candy also asserted numerous objections to Silva's evidence, including to exhibit N, claiming the exhibit lacked foundation and authentication and was hearsay.
In reply, Silva argued primarily that the trial court should grant summary adjudication on the nearest-tenth rounding affirmative defenses because See's Candy has now admitted that its time records are "inaccurate." In support, she directed the court to one of See's Candy's responses to her statement of undisputed facts. Specifically, Silva's undisputed fact No. 18 stated:
The court issued a tentative ruling in Silva's favor based in part on the court's view that See's Candy had admitted its time records were "inaccurate" and that See's Candy did not show the class members were compensated for all time subject to its control.
At the hearing, See's Candy's counsel argued that it never admitted the time records were inaccurate — it had merely acknowledged that employee compensation was calculated based on grace period policies rather than actual
In its final ruling, the court found in See's Candy's favor, concluding that Silva did not meet her summary adjudication burden and stating that Silva failed to establish that employee time was rounded or how it was rounded, and if so whether Silva and other class members were not compensated for all worktime. The court alternatively found that even if the burden shifted, See's Candy met its burden to show triable issues of fact with respect to its nearest-tenth rounding affirmative defenses.
Silva thereafter moved for reconsideration based on claimed "`New Law'" and "`New Facts.'" With respect to the new law, Silva relied primarily on the recently filed decision in Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191 [127 Cal.Rptr.3d 185, 254 P.3d 237], in which the high court (in response to a certified question from the Ninth Circuit) held that California's overtime provisions apply to nonresident plaintiffs' claims for compensation for work performed in California for California employers. Plaintiffs also relied on Securitas Security Services USA, Inc. v. Superior Court (2011) 197 Cal.App.4th 115 [127 Cal.Rptr.3d 883], for its discussion of well-settled statutory interpretation principles. (Id. at p. 121.)
With respect to the new facts, Silva produced an expert declaration based on alleged newly produced employee time records. In the declaration, Dr. Thomas Thompson, a research engineer, stated that based on his analysis of See's Candy's time records from approximately October 20, 2005, through March 2010, class members lost a total of $1,411,595.54 based on the nearest-tenth rounding policy and the grace period policy. In reaching this conclusion, Dr. Thompson, unlike Dr. Saad, did not separate out the grace period time adjustments, and instead apparently assumed each and every employee was working during the grace period and was not paid for that time. Thus, if an employee punched in at 7:55 a.m. and spent the next five minutes solely on personal activities under the grace period rules, Dr. Thompson would have calculated this time as five minutes of unpaid earned wages.
See's Candy argued there was no legal or factual basis for a reconsideration, and objected to Dr. Thompson's declaration on numerous substantive and evidentiary grounds, including that Dr. Thompson failed to analyze the nearest-tenth policy separate from the grace period policy.
During the hearing on the reconsideration motion, Silva's counsel reasserted that See's Candy had admitted its records were "inaccurate" and
The court then entered its final order granting Silva's reconsideration motion and granting summary adjudication in Silva's favor on each of the four challenged affirmative defenses. With respect to the 39th and 40th (nearest-tenth rounding policy) affirmative defenses, the court gave several reasons for its ruling. First, the court stated "that based on See's admission that its time records are inaccurate, See's has violated California law and summary adjudication is appropriate." The court explained that "California law requires See's to retain accurate time records" and the "United States Supreme Court has long held that [an] employer may not benefit from inaccurate time records." Second, the court stated it "agrees with [Silva] that [See's Candy] failed to sufficiently address the plain language of Labor Code section 204. [¶] As See's has not rebutted the `plain language' of the statute — Labor Code section 204 requiring the payment of all wages every two weeks — the 39th [and 40th] affirmative defenses are not proper defenses." Third, the court found that "See's does not (and cannot) dispute that the federal rounding standard requires payment for all work time" and "[Silva] establish[ed] that See's does not dispute that they have provided no proof of `Full payment' as to Class members."
See's Candy filed a writ of mandate petition challenging the trial court's summary adjudication order with respect to its 39th and 40th affirmative defenses.
When a plaintiff moves for summary adjudication on an affirmative defense, the court shall grant the motion "only if it completely disposes" of
If the plaintiff does not make this showing, "`it is unnecessary to examine the [defendant's] opposing evidence and the motion must be denied.'" (Rehmani v. Superior Court (2012) 204 Cal.App.4th 945, 950 [139 Cal.Rptr.3d 464].) "`However, if the moving papers establish a prima facie showing that justifies a [ruling] in the [plaintiff's] favor, the burden then shifts to the [defendant] to make a prima facie showing of the existence of a triable material factual issue.'" (Ibid.)
On appeal we conduct a de novo review, applying the same standard as the trial court. (AARTS Productions, Inc. v. Crocker National Bank (1986) 179 Cal.App.3d 1061, 1064 [225 Cal.Rptr. 203].) Our obligation is "`"to determine whether issues of fact exist, not to decide the merits of the issues themselves."'" (Wright v. Stang Manufacturing Co. (1997) 54 Cal.App.4th 1218, 1228 [63 Cal.Rptr.2d 422].) We must "`consider all of the evidence' and `all' of the `inferences' reasonably drawn therefrom [citation], and must view such evidence [citations] and such inferences [citations], in the light most favorable to the opposing party." (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 [107 Cal.Rptr.2d 841, 24 P.3d 493]; see Rehmani v. Superior Court, supra, 204 Cal.App.4th at p. 951.) Summary adjudication is a drastic remedy and any doubts about the propriety of summary adjudication must be resolved in favor of the party opposing the motion. (See Johnson v. Superior Court (2006) 143 Cal.App.4th 297, 304 [49 Cal.Rptr.3d 52].)
The court certified a class on Silva's claim that See's Candy's nearest-tenth rounding policy violated the employees' rights to full compensation for work performed. In its 39th and 40th affirmative defenses, See's Candy alleged this policy was consistent with federal and state law permitting employers to use rounding for purposes of computing and paying wages and that it complied with state and federal requirements for rounding employee worktime. In moving for summary adjudication on these defenses, Silva argued that the nearest-tenth rounding policy violated California law because the evidence
Before addressing the parties' specific factual contentions, it is necessary to determine the appropriate legal standard under which to analyze these facts. Although California employers have long engaged in employee time-rounding, there is no California statute or case law specifically authorizing or prohibiting this practice. Absent specific binding authority under California law, See's Candy argues that it is appropriate for this court to adopt the federal regulatory standard, which is also used by the DLSE (the state agency charged with enforcing Cal. wage and hour laws), and allows rounding if the employees are fully compensated "over a period of time." (29 C.F.R. § 785.48(b) (2012).) Silva counters that this federal/DLSE rule violates California statutes and rounding should be permitted only if the employer "unrounds" every two weeks to ensure full compensation. For the reasons explained below, we conclude the federal/DLSE standard is the appropriate standard.
About 50 years ago, the United States Department of Labor (DOL) adopted a regulation under the Fair Labor Standards Act of 1938 (FLSA; 29 U.S.C. § 201 et seq.) permitting employers to use time-rounding policies under certain circumstances (DOL rounding regulation). (29 C.F.R. § 785.48(b) (2012); see Alonzo v. Maximus, Inc. (C.D.Cal. 2011) 832 F.Supp.2d 1122, 1126 (Alonzo).) The regulation states: "It has been found that in some industries, particularly where time clocks are used, there has been the practice for many years of recording the employees' starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. For enforcement purposes this practice of computing working time will be accepted, provided that 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." (29 C.F.R. § 785.48(b) (2012), italics added.)
As long interpreted by the federal courts, this "regulation permits employers to use a rounding policy for recording and compensating employee time as long as the employer's rounding policy does not `consistently result[] in a failure to pay employees for time worked.'" (Alonzo, supra, 832 F.Supp.2d at p. 1126.) "[A]n employer's rounding practices comply with [the DOL rounding regulation] if the employer applies a consistent rounding policy that, on average, favors neither overpayment nor underpayment." (Ibid.; accord, East v. Bullock's Inc. (D.Ariz. 1998) 34 F.Supp.2d 1176, 1184; Gillings v. Time
Although there are no California reported decisions holding the federal standard applies under California law, the agency empowered to enforce California's labor laws (DLSE) has adopted the federal regulation in its manual (DLSE Enforcement Policies and Interpretations Manual (2002 rev.) (DLSE Manual)). Specifically, the DLSE Manual provides: "The Division utilizes the practice of the [DOL] of `rounding' employee's hours to the nearest five minutes, one-tenth or quarter hour for purposes of calculating the number of hours worked pursuant to certain restrictions .... [¶] ... There has been [a] practice in industry for many years to follow this practice, recording the employees' starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. For enforcement purposes this practice of computing working time will be accepted by DLSE, provided that 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."
Citing the DLSE Manual, one federal district court recently found that the DOL rounding standard applied to an employee's time-rounding challenge brought under California law. (See Alonzo, supra, 832 F.Supp.2d. at pp. 1126-1127.) Although the parties stipulated that the DOL rounding regulation governs the case, the court also indicated its agreement that the federal regulation is the applicable standard under California law. (Id. at p. 1127 & fn. 3.) The Alonzo court explained that the federal standard has been expressly adopted by the DLSE and the adoption of the federal standard is "consistent with ... the practice of California courts to look to [federal law] as guidance for interpreting analogous provisions of California law ...." (Id. at p. 1127, fn. 3; accord, Gillings v. Time Warner Cable LLC, supra, 2012 WL 1656937 at p. *5 [rounding practices neutral over time "do not violate California labor law since their net effect does not withhold wages"].)
We agree with the Alonzo court. In the absence of controlling or conflicting California law, California courts generally look to federal regulations under the FLSA for guidance. (Huntington Memorial Hospital v. Superior Court (2005) 131 Cal.App.4th 893, 903 [32 Cal.Rptr.3d 373].) The policies underlying the federal regulation — recognizing that time-rounding is a practical method for calculating worktime and can be a neutral calculation tool for providing full payment to employees — apply equally to the employee-protective policies embodied in California labor law. Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its net effect is to permit employers to efficiently calculate hours worked without imposing any burden on employees. (See Gillings v. Time Warner Cable LLC, supra, 2012 WL 1656937 at p. *5.)
Moreover, as the DLSE and several amici curiae have noted, the rounding practice has long been adopted by employers throughout the country. Under these circumstances, "it is reasonable for the court to construe the requirements of the [California] wage law in a manner consistent with [the] FLSA. To hold otherwise would preclude [California] employers from adopting and maintaining rounding practices that are available to employers throughout the rest of the United States." (East v. Bullock's Inc., supra, 34 F.Supp.2d at p. 1184 [applying DOL regulation to Arizona law that is silent on rounding issue].)
As her main argument opposing the federal standard, Silva argues that the federal regulation is inconsistent with section 204 and thus violates California law.
Moreover, Silva's contention has a false premise — that using unrounded figures within a finite time period is the only way to measure "All" earned wages. (§ 204, subd. (a).) Fundamentally, the question whether all wages have been paid is different from the issue of how an employer calculates the number of hours worked and thus what wages are owed. Section 204 does not address the measurement issue. The Legislature has amended section 204 since the DLSE adopted the federal rounding regulation, and has never indicated that the state agency's adoption of the federal rounding rule is inconsistent with its statutory provision.
Additionally, the notion that the rounding regulation is consistent with federal law but inconsistent with state law because of California's twice-monthly wage timing statute ignores the fact that under federal law — as well as most state laws — the employer is subject to some form of a payment deadline. (See Rogers v. City of Troy (2d Cir. 1998) 148 F.3d 52, 55 ["Although the FLSA does not explicitly require that wages be paid on time, the courts have long interpreted the statute to include a prompt payment requirement."]; see also 29 C.F.R. § 778.106 (2012) [requiring that all overtime wages be paid on the employee's regular payday].)
Silva contends that because under California law — and not federal law — the rate of compensation increases past the eight-hour mark, the DOL
Under California's overtime law, an employer must pay the overtime pay rate for work in excess of eight hours in one workday and in excess of 40 hours in one workweek; whereas the federal rule generally imposes the overtime pay rate only for work in excess of 40 hours in a workweek, and not for the amount of work performed per day. (§ 510, subd. (a); 29 U.S.C. § 207(a)(1), (2); see Huntington Memorial Hospital v. Superior Court, supra, 131 Cal.App.4th at p. 899 & fn. 1.) However, this difference does not show that rounding under the DOL rounding regulation will always burden the employee under California law. Even under the FLSA's 40-hour overtime rule, the rounding rules have an impact on overtime — it is merely a different degree of impact. There is no analytical difference between rounding in the context of daily overtime and rounding in the context of weekly overtime. Additionally, the FLSA contains various daily overtime rules applicable to certain industries, and none of these contain any restriction on rounding. (See 29 U.S.C. § 207(j), (m)(1).) Moreover, as reflected in Dr. Saad's expert declaration, rounding will not necessarily affect an employee's wages in the long run even when considering California overtime pay rules. As discussed below, the issue whether California's overtime rules mean a rounding rule is biased against employees is a factual issue and not a legal one.
In this regard, Silva's reliance on language in Sullivan v. Oracle Corp., supra, 51 Cal.4th 1191 is misplaced. Sullivan resolved issues concerning the scope of California overtime and statutory unfair competition laws as applied to work performed by nonresidents for a California-based employer within and outside the state. (Id. at p. 1194.) In addressing these certified issues, the high court noted that California's overtime law (§ 510, subd. (a)) "declares simply that `[a]ny work' in excess" of the statutory time period must be compensated at the premium rate and the overtime laws apply to "`all individuals' employed in this state." (Sullivan, supra, at p. 1197, original italics.) The Sullivan court also emphasized the important public policies served by our state's overtime laws. (Id. at p. 1198.)
Silva had the initial burden. To show no triable issues of fact and that she was entitled to judgment as a matter of law, Silva relied primarily on Dr. Saad's 2010 report (which evaluated only retail shop employees). However, in that report Dr. Saad determined that rounding to the nearest tenth of an hour was neutral over time and that shop employees were in fact overpaid by seven seconds per shift. As the trial court initially found, this evidence did not meet Silva's burden to show the rounding policy did not fully compensate the employees over time. In moving for reconsideration, plaintiff produced her expert's report, in which Dr. Thompson concluded that the employees lost a total of $1,411,595.54 from 2005 through 2010 based on See's Candy's rounding policy. However, this conclusion was based on the assumption that
Moreover, even if Dr. Thompson's report satisfied Silva's burden to show she and all the other class members were not paid fully for their work because of the nearest-tenth rounding policy, See's Candy presented evidence creating a triable issue of fact. As detailed in the factual section, in his 2011 report, Dr. Saad concluded the nearest-tenth rounding policy was "both mathematically and empirically unbiased" and actually resulted in a total gain of 2,749 hours for the class members as a whole. Under this analysis, most of the class members, including Silva, were fully compensated for every minute of their time (including for overtime pay) and the majority was paid for more time than their actual working time.
Based on Dr. Saad's report, See's Candy met its burden to show triable issues of fact regarding whether its nearest-tenth rounding policy was proper under California law because it was used in a manner that did not result over a period of time in the failure to compensate the employees for all the time they actually worked. (See 29 C.F.R. 785.48(b) (2012).)
In her brief opposing the writ petition, Silva does not focus on the issue whether the parties met their summary adjudication burdens regarding whether the class members suffered a loss from See's Candy's rounding policy. Instead, she devotes most of her brief to several related arguments, each of which we address below.
First, Silva strenuously argues, and the trial court found, that summary adjudication was proper because See's Candy admitted its time records were "inaccurate." This argument is unsupported on the factual record before us.
Based solely on this response in which See's Candy referred to its grace period policy, Silva argues (and the trial court found) that summary adjudication was proper because See's Candy has now admitted violating California law by maintaining inaccurate time records. The argument is without merit.
See's Candy's grace period policy allows employees who have work schedules programmed into Kronos to clock in up to 10 minutes early and clock out up to 10 minutes late. With respect to those time punches, the scheduled time — and not the punch time — determines the employee's pay because the employer assumes (based on its formal policy) that the employee is not working and not under its control during this time.
But this difference between the punch time and the pay-calculation time during the grace period does not show See's Candy's time records are inaccurate for purposes of the summary adjudication motion. The parties agree (at least for purposes of this writ petition) that under California law a grace period (the time during which an employee punches in before his or her compensable pay is triggered) is allowed if the employee is not working or is not under the employer's control. To the extent an employee claims that he or she was not properly paid under this grace period rule, this claim raises factual questions involving whether the employee was in fact working and/or whether the employee was under the employer's control during the grace period.
In moving for summary adjudication, Silva did not produce any evidence showing the class members who clocked in during the grace period were working or were under the employer's control. In responding to the motion, See's Candy produced facts showing the employees were not working and were engaged in their own personal activities. Silva made no attempt to rebut
Based on Silva's counsel's admission that Silva was not moving for summary adjudication on the grace period issue and based on the record showing a triable issue of fact as to whether the employees were working or were under the employer's control during the grace period, See's Candy's reference to its grace period policy in response to Silva's undisputed statement of facts does not constitute See's Candy's admission that its time records are "inaccurate" for purposes of evaluating the nearest-tenth rounding policy.
Silva has nonetheless devoted most of her briefing in this court to the inaccuracy/grace period issues. For example, she asserts that evidence of inaccurate time records "was (and is) overwhelming" because the grace period and rounding practices are "inextricably entwined" and See's Candy "failed to investigate whether its employees were actually `under control' after being required to `punch in.'" (Capitalization omitted.) In support, she discusses authority providing that employees who are in the mercantile industry must be paid if they are working or if they are "`subject to the control of'" an employer. (Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 582 [94 Cal.Rptr.2d 3, 995 P.2d 139] (Morillion).) In defining "control," the Morillion court held employees were subject to the control of their employers when they are prevented from using "`the time effectively for [their] own purposes.'" (Id. at p. 586.) Applying this rule, the California Supreme Court determined that agricultural employees who were "required" to ride an employer's buses to travel to and from the fields must be paid during the transportation time. (Id. at p. 578, italics added.)
Silva argues that as in Morillion, the See's Candy employees should have been paid during the grace period after they clocked in. However, she presented no evidence on whether the employees were prevented from using "`the time effectively for [their] own purposes'" (Morillion, supra, 22 Cal.4th at p. 586), and See's Candy presented evidence that the employees did not work and were not under the employer's control during this time. This is a grace period issue. If the evidence later shows that the employees were
At oral argument, Silva's counsel repeatedly asserted that summary adjudication was proper because of the impact of See's Candy's "unique" grace period policy on its rounding policy and, when viewing both policies together, employees were not fully compensated for their work over time. The undisputed evidentiary record does not support this argument for purposes of Silva's summary adjudication motion.
Silva alternatively argues the court properly granted summary adjudication because an employee is "subject to a `progressive discipline policy'" when he or she is tardy. Silva relies on a provision in See's Candy's employee manual stating: "Regular attendance is expected of every employee. Each employee is expected to be in the shop and ready to work at his or her starting time. Repeated tardiness or absences will not be tolerated." Under this policy, an employee's tardiness may be "subject to discipline," which can "in some instances" involve termination.
These rules do not show See's Candy's rounding policies result in an employee being unfairly disciplined. There was no evidence the discipline policy was ever applied to any employee because he or she was a few minutes late. Moreover, there is no evidence that See's Candy uses the rounded time (as opposed to the clocked-in time) when applying its tardiness policy. If the nearest-tenth rounding policy is neutral, and the tardiness policy is based solely on the actual punch time, on the record before us there is no basis for finding that See's Candy unfairly benefits from the rounding policy because of the discipline policy.
In support for her argument, Silva cites Austin v. Amazon.Com, Inc., supra, 2010 WL 1875811. However, Austin was a pleading case in which the district court found the plaintiff stated a cause of action by alleging that the employer's rounding policy was unfair as applied because the employer used the rounding method in a manner that did "not `average[] out so that the employees are fully compensated for all the time they actually work.'" (Id. at p. *3.) The Austin court noted that the plaintiff's allegations show that the employer's discipline policy allows rounding when it benefits the employer,
The case before us is a summary adjudication and not a pleading case. Although the tardiness policy may be an issue in the litigation, there is no factual basis on the record before us supporting a legal conclusion that See's Candy's tardiness and related discipline policy necessarily means that the nearest-tenth rounding policy is unfair to, or biased against, the employees in the class.
Silva next argues that See's Candy's rounding practice "cannot be `neutral' in that California possesses the `8-hour Overtime Rule' (as opposed to the [`]40-hour Overtime Rule' under the FLSA)." We agree that California's overtime rules may mean that under a nearest-tenth rounding policy, an employee will not be fully compensated for the premium time if an employee works more than eight hours in one day. However, the issue whether this will result in undercompensation over time is a factual one. Silva did not present evidence showing the overtime rules meant that she and the other class members did not receive their full compensation. On the other hand, See's Candy presented a statistical study from its expert showing that in this case "the nearest tenth rounding policy did not negatively impact employees' overtime compensation." According to Dr. Saad, it was "virtually a wash" with respect to overtime pay, and "neither the employees nor See's [Candy] benefited from this rounding practice."
In this regard, Silva's reliance on Alonzo, supra, 832 F.Supp.2d 1122 and Russell v. Illinois Bell Telephone Co. (N.D.Ill. 2010) 721 F.Supp.2d 804 is misplaced. In Alonzo, the court granted the employer's summary judgment motion on the plaintiff's claim that the rounding policy did not fully compensate the employees for time worked. (Alonzo, supra, 832 F.Supp.2d at pp. 1126-1129.) In Russell, the sole matter before the court was the defendant's motion to decertify the class. In ruling on this motion, the district court noted that "If, as plaintiffs allege, [the employer's] time rounding and log out policies often caused plaintiffs to work unpaid overtime ... then these company-wide practices may have resulted in unpaid overtime work." (Russell, supra, at p. 820.) However, the court specifically declined to "decide the merits of plaintiffs' [rounding] claim." (Ibid.)
Silva's reliance on Eyles, supra, 2009 WL 2868447 is likewise unhelpful. In Eyles, the employer moved for summary judgment on the plaintiff's claim
In this case, See's Candy's nearest-tenth rounding policy rounded both up and down from the midpoint, and See's Candy specifically presented evidence that over time the rounding policy did not result in a loss to the employees. Moreover, unlike Eyles, the employer here is not asking the court to find its policy was lawful as a matter of law; instead it is merely opposing plaintiff's motion for summary adjudication and asking the court to permit it to litigate its affirmative defense at trial.
Silva argues that this case is the same as Eyles because the grace period policy "is an `automatic round down'" because it moves the clock back to the scheduled end time "with no corresponding `round-up.'" However, as discussed, Silva did not move for summary adjudication based on the grace period defense, and instead sought only to eliminate See's Candy's affirmative defense based on its nearest-tenth rounding policy. This rounding policy does have an automatic rounding up and down from the midpoint. Moreover, the grace period policy is not a rounding policy per se; it is a policy under which an employer seeks to accurately pay employees from the time they begin and end work. The issue whether reciprocal rules are required to ensure fairness under a grace period policy is not before us.
For purposes of this summary adjudication motion, we reject Silva's unsupported suggestion that the federal regulation applies only to "`time clocks'" and not to a software system such as Kronos.
Let a writ of mandate issue commanding the superior court to vacate the portion of its summary adjudication order to the extent it granted summary
Benke, Acting P. J., and Aaron, J., concurred.
