Phillips 66 in $46.5 million Wage Dispute

San Francisco, CA Phillips 66 Co. and refinery workers duked it out before a California federal judge on March 14 over meal-break and time-rounding policies. Workers claims that Phillips automatically deducted 30-minute break periods from hundreds of workers' pay add up to $46.5 million in violation of California labor law.

Phillips allegedly deducted 30-minute break periods automatically from its refinery workers' pay, even though workers claim their breaks were often late, short, interrupted or did not occur at all, and they alleged the company didn't record the start and end times for the breaks as required by the state Industrial Welfare Commission's wage order 1, reported Law360.

In the Notice of pending class action, Plaintiffs Dean Robbins, Timothy Green, Ian Clare and Keith Washington claim that Phillips 66:

• Had an alleged practice of automatically deducting 30 minutes for a meal break without requiring the precise recordation of start and end times of each meal break, and that this resulted in unpaid meal breaks.
• Rounded employee punch times, resulting in underpayment of wages.

Phillips has denied any denies any liability or wrongdoing and contends it treated its employees lawfully at all times.

According to the summary judgment motion, if the judge sides with the workers, the total awards would come out to $35.5 million for the auto-deduct class and $11 million for the rounding class, plus attorney fees. The former class This class claims they're entitled to $29.5 million in meal time premiums, plus $2.4 million in wage statement penalties and $3.6 million in waiting time penalties. The Rounding class claims they are entitled to $2.3 million in unpaid wages, $2.8 million in wage statement penalties, $4.4 million in waiting time penalties, plus $1.5 million in liquidated damages.

The Class comprises two groups:

• Auto-Deduct Class: those non-exempt hourly employees for whom Phillips 66 deducted 30 minutes for a meal break but did not require the precise recordation of start and stop times for each meal break.
• Rounding Class: those non-exempt hourly employees for whom Phillips 66 rounded their time punches.

The bone of contention is the 'rounding up' issue. In Phillips own motion for summary judgment, the energy giant disputed that California law requires employers to record the exact start and stop times of meal breaks, and it argued that its 7-minute grace period and rounding policy is neutral and even resulted in some workers being overpaid. Plaintiffs’ lawyer told Judge Seeborg that the record is complete enough for the judge to rule on liability in favor of the classes.

Defendant’s lawyer argued that under the company's rounding policy, class members received — for more than 62% of their shifts — the same or greater pay from rounding than if they had been paid based on actual punch times. As well, wage policies were agreed to under the collective bargaining agreements with the workers' union and therefore can't violate labor laws.

Judge Seeborg brought up the state high court's anticipated ruling in See's Candy Shops Inc. v. Superior Court and whether it would impact the case. In See's Candy, a state appellate court panel found there was no California law forbidding the employer's practice to round workers' time, but the decision is now before the California Supreme Court. Judge Seeborg has taken the arguments under submission.

Time Clock Rounding

Time clock rounding is the rounding up or down of an employee’s hours worked. According to the federal Fair Labor Standards Act (FLSA), employers that round time clocks must round only to certain fractions of an hour and they cannot use rounding to withhold wages that an employee has fully legally earned. For instance, fifteen-minute rounding is the most common form and involves rounding up or down to the nearest quarter hour. In other words, it rounds all start or end times to one ending in :00, :15, :30 or :45.

Say an employee clocks in at 9:02 a.m. and clocks out at 4:59 p.m. An employer might round their start time to 9 a.m. and their end time to 5 p.m. Many employers do so without ever realizing that time clock rounding is a formal concept with legal ramifications. 

Employers use time clock rounding to streamline their payroll process. For example, if an employee is paid $15 per hour and they work 7 hours, 58 minutes, you must pay them $15 x 7 + $15 x (58/60) = $119.50. If you round up the time to eight hours, you can simply calculate $15 x 8 = $120, and the 50-cent difference is minimal.

The 7-minute Rule//One-quarter of an hour 

It's called the 7-minute rule because in the first 7 minutes of a 15-minute interval you round the time back, and in the next seven minutes you round the time forward. Implementing one of these rules creates an unbiased system for time rounding.