time-rounding policy

Hospital employees often clock in and out at the peripheries of their shifts, trusting that their time is tallied fairly and that their paychecks reflect every minute worked. Yet, when timekeeping policies round these hours to the nearest interval, questions arise about adherence to the Fair Labor Standards Act. A recent ruling from the 8th U.S. Circuit Court of Appeals, Houston vs. St. Luke’s Health System Inc., has cast a spotlight on such practices, particularly in the case of a Missouri hospital system’s method of handling shift start and end times. The policy of time rounding is now under scrutiny, including its potential to undercut employee wages.

Understanding the Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) is a comprehensive federal law that dictates minimum wage, overtime pay, and recordkeeping for U.S. workers. In addition to setting these standards, the FLSA provides guidelines on how employers can round work hours, aiming to ensure that employees are compensated for the time they actually work. It mandates that non-exempt employees are paid at least the federal minimum wage and receive overtime at one and a half times their regular rate for work exceeding 40 hours per week. This act, enforced by the U.S. Department of Labor, is designed to protect workers from unfair pay practices and requires employers to carefully calibrate their time-rounding policies to maintain compliance and fair treatment.

St. Luke’s Time-Rounding Policy and the Lawsuit

St. Luke’s Health System in Missouri implemented a timekeeping policy that has recently come under legal fire for its practice of rounding employees’ clock-in and clock-out times. This policy adjusted the recorded work hours to the nearest six-minute mark at the start and end of shifts. As a result, a former employee initiated legal action against the hospital, alleging that this rounding practice led to a failure to compensate for all hours worked, thus violating the overtime provisions of the FLSA. Furthermore, the lawsuit included claims of unjust enrichment under state law, alongside individual claims for violations of Missouri’s minimum-wage law and breach of contract.

The legal proceedings against St. Luke’s evolved into a class-action lawsuit, spotlighting the plights of numerous employees affected by the rounding policy. Two distinct classes were certified: one under the FLSA comprising employees who worked at St. Luke’s from September 2016 to September 2018, and another for unjust enrichment encompassing individuals employed from April 2012 to September 2018. During the discovery phase, it came to light through expert analysis that the rounding policy more often than not worked in favor of the employer. This sparked a broader discussion on the legality of rounding practices and their impact on employees’ earnings.

Evidence of Potential FLSA Violations

The scrutiny of St. Luke’s Health System’s rounding practices brought forth compelling evidence from expert analyses, which suggested potential violations of the FLSA. The plaintiff’s expert found that the rounding policy resulted in more frequent reductions than additions to employees’ logged time. Specifically, the data showed that approximately half of the shifts were shortened due to the policy, while a little over a third saw an increase in recorded time, leaving the remainder unaffected. The expert’s calculations pointed to a substantial cumulative deficit, estimating a loss of 74,000 hours, which translated into significant unpaid wages over the evaluated period.

This loss was not just a matter of statistics but had tangible impacts on the workforce. According to the findings, employees who lost time due to the rounding policy effectively donated nearly two hours of work each year to the hospital without compensation. For those affected, this meant a consistent undervaluation of their labor, with the hospital benefiting from what amounted to thousands of hours of unpaid work. The experts’ reports underpinned the argument that St. Luke’s practices were not neutral or fair as required by the FLSA, since they systematically failed to compensate employees fully over time, setting the stage for a legal showdown on the policy’s compliance with labor laws.

Findings of the Courts

In the initial ruling, the district court sided with St. Luke’s Health System, granting summary judgment in favor of the hospital. The court rationalized that the time-rounding policy was ostensibly neutral, as it affected roughly an equal number of shifts with added time as those with time taken away, and the average amount of time lost or gained per shift was minimal. However, this judgment was overturned when the 8th Circuit Court of Appeals took a closer look. The appellate court challenged the lower court’s interpretation, emphasizing that the policy, in practice, resulted in a net loss for employees. This was a significant factor that the FLSA’s regulations on rounding intend to guard against, prompting the 8th Circuit to reverse the summary judgment and remand the case for further proceedings, taking into account the overarching impact of the policy on employees’ compensation.

Implications of the 8th Circuit’s Decision

The decision of the 8th Circuit has reverberating implications for employers, especially within the healthcare industry where minute-by-minute timekeeping is common. It sends a clear message that rounding practices must be closely scrutinized to ensure they do not systematically disadvantage employees over time. This ruling underscores the need for companies to maintain timekeeping policies that are truly neutral and in strict compliance with the FLSA, as any policy resulting in a net loss of wages could lead to potential liability. For employees, the decision is a reaffirmation that their rights to fair compensation are protected by the courts, and that any systematic underpayment, no matter how minimal it seems per shift, can be challenged.

Questions About Time-Rounding Policies at Your Workplace?

The evolving landscape of employment law, particularly regarding timekeeping and wage calculations, underscores the necessity for employees to seek knowledgeable legal guidance to protect their rights. If you have questions about how these laws apply to your situation or if you suspect that your rights under the FLSA may have been violated, the Lore Law Firm can provide you with experienced legal counsel and representation. Please complete our free and confidential online client intake form today to get started.