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  4.  | The California Supreme Court Issues an Important Decision Rejecting Use of Time Rounding Policies for Meal Periods

The California Supreme Court Issues an Important Decision Rejecting Use of Time Rounding Policies for Meal Periods

| Mar 5, 2021 | Employment Law, Employment Litigation, Wage & Hour Laws |

Last week, the California Supreme Court dealt a major blow to California employers in Donohue v. AMN Services, LLC, holding that:

(1) Employers cannot engage in the practice of rounding time punches in the meal period context, because meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective.

(2) Employer time records showing noncompliant meal periods raise a presumption of meal period violations.

Donohue’s Class Action Lawsuit: The Supreme Court Disallows Rounding Policies for Meal Periods

 Kennedy Donohue, a nurse recruiter, brought a class action lawsuit against her former employer, AMN Services, LLC, alleging that the company improperly rounded time punches for meal periods and failed to pay the required one hour of additional premium pay for noncompliant meal periods which were less than 30 minutes in length. The company’s timekeeping system rounded time punches for meal periods to the nearest 10-minute increment. For example, a 21-minute lunch from 12:04 p.m. to 12:25 p.m. would be recorded as a 30-minute lunch from 12:00 p.m. to 12:30 p.m. Similarly, a 38-minute lunch from 11:55 a.m. to 12:33 p.m. also would be recorded as a 30-minute lunch from 12:00 p.m. to 12:30 p.m.

Initially, the trial court and Court of Appeal ruled in the company’s favor, finding that its rounding policy for meal periods was permissible because California law permits employers to use such rounding policies to calculate regular and overtime wages so long as the rounding policy is neutral on its face.

However, last week the California Supreme Court reversed the Court of Appeal decision, finding that the use of a rounding system for meal periods was problematic because it did not capture meal periods that were slightly shorter than 30 minutes or started a few minutes after the end of the fifth hour. Thus, even though employees may have been fairly paid under the rounding system because longer and shorter lunches evened themselves out, they nevertheless were not actually receiving a full 30-minute meal period and therefore were entitled to the meal period premium.

The Supreme Court opined that the logic that supports rounding practices for regular and overtime wages does not apply for meal periods, finding it is incompatible with the state’s policy of promoting strict adherence to the safeguards for workers’ health, safety, and well-being that meal periods are intended to provide. The high court concluded that a shorter or delayed meal period one day cannot be offset by a longer or earlier meal period another day because within a 30-minute timeframe, “a few minutes can make a significant difference when it comes to eating an unhurried meal, scheduling a doctor’s appointment, giving instructions to a babysitter, refreshing oneself with a cup of coffee, or simply resting before going back to work.”

The Real Stinger: Employer Time Records Showing Noncompliant Meal Periods Raise a Presumption of Violations

In a further upset for California employers, the Supreme Court also held that time records showing noncompliant meal periods (i.e., a missed, delayed or short meal period) raise a presumption of meal period violations. The Court reasoned that because the burden is on the employer (and not the employee) to keep accurate time records, a presumption of liability for meal period violations applies when the employer’s records show noncompliant meal periods.

This holding may have a significant impact on the litigation of meal periods claims. When an employee moves for summary adjudication (asking the court to rule in his or her favor before trial), the employee must prove each element of the cause of action. Under this new ruling, an employee can more easily satisfy this burden by using an employer’s noncompliant time records against the employer to raise a presumption of meal period violations.

Employers are not without a defense: they may rebut the presumption by presenting evidence that employees were compensated for noncompliant meal periods or had in fact been provided compliant meal periods, during which they chose to work, and therefore voluntarily waived their meal periods.

What Action Should Employers Take Moving Forward?

There are two major takeaways from this decision: 1) rounding policies may not be applied to meal periods; and 2) it is the employer’s obligation both to relieve their employees for at least one meal period for shifts over five hours and to keep accurate records of having done so. Failure to do so may result in noncompliant meal period records being used against an employer to create a presumption of violations. Accordingly, it is imperative that employers: 1) review their time keeping policies and eliminate rounding policies that apply to meal periods; and 2) make sure they are keeping accurate records of meal periods. The consequences for failure to provide and record compliant meal periods can be significant; meal period violation lawsuits often come bundled with additional wage and hour claims including claims for exorbitant penalties.

Attorneys at Duggan McHugh Law Corporation are available to help you navigate California employment laws, including those regarding meal periods, and are available to draft and help implement legally-compliant workplace policies.