The California Supreme Court last month determined that the practice of rounding meal period time was impermissible under state law. >Donohue v. AMN Services, LLC, 2021 DJDAR 1797 (Feb. 25, 2021). The court also clarified the employer's burden at the summary judgment phase. As a result, California employers will want to review and, as necessary for compliance, update their meal period timekeeping practices.
Under Labor Code Section 512, an employee working more than five hours is entitled to an uninterrupted, unpaid meal period of 30 minutes before the end of each period of five hours worked, except that an employee who works for less than six hours can agree to waive the meal period. The California Supreme Court in Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012), held that an employer provides a compliant meal period when it "relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so." In See's Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 (2012), employees of the candy manufacturer were refused premium pay for lost time because the employer's policy of rounding work start and stoppage times was neutral on its face and as applied. Rounding the time paid to an employee who checked in a few minutes late and an employee who checked in a few minutes early to the nearest increment of an hour that the employer typically used (1/10 or 1/4 of an hour, for example) was deemed permissible as long as the rounding of pay did not result in significant disparities between employees who clocked in early and those who clocked in late. Before last week, employers who rounded the 30-minute meal period time would be in compliance with the Labor Code if their policy applied neutrally.
The Facts of Donohue v. AMN Services, LLC
Kennedy Donohue was hired to work eight-hour days as a nurse recruiter at AMN Services, a health care staffing LLC. AMN Services' internal policy represented that employees were entitled to an uninterrupted 30 minute meal period, and an electronic timekeeping system called Team Time required employees to punch in and out. AMN Services engaged in the practice of rounding meal period time: If an employee clocked out for lunch at 1:02 p.m. and clocked in after lunch at 1:25 p.m, the time would be recorded as 1:00 p.m. and 1:30 p.m.
As a result of an approach implemented in 2013 under the above parameters, Donohue and his fellow nurse recruiters sued the following year, arguing that AMN was stealing compensable time by engaging in an unlawful rounding practice. AMN won summary judgment in San Diego County Superior Court, which was upheld in the Court of Appeal in 2018. AMN Services argued throughout that because its rounding practice was neutral, it did not run afoul of California law.
The two key issues considered by the California Supreme Court on appeal were (1) whether rounding was permissible in the meal period context, and (2) whether records showing noncompliant meal periods raise a rebuttable presumption of violations, including at the summary judgment stage.
The California Supreme Court's Holding
The California Supreme Court held that "the practice of rounding time punches for meal periods is inconsistent with the purpose of the Labor Code provisions" and the state's wage orders. The court reasoned that "even relatively minor infringements on meal periods can cause substantial burdens to the employee. Forcing employees to work through their meal periods not only causes economic burdens in the form of extra work but also noneconomic burdens on the employees' health, safety, and well-being."
Relying on See's Candy Shops, AMN Services had argued that because the time was rounded up by less than a tenth of an hour, it was mathematically neutral over time. While the court did not explicitly overturn See's Candy Shops, which may still apply in the non-meal period context, it held that "a rounding policy erodes the health and safety protections that the meal period requirements are intended to achieve" in requiring employers compensate the employee with premium pay when they violate the meal period law.
Rejecting See's Candy Shops' permissive approach to rounding which is allowed under corresponding federal law, the court explained that "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." Accordingly, the court determined that AMN Services' rounding practice violated the law.
Switching the Burden to the Defendant Employer
The second issue in the case concerned whether the evidence of violation in AMN Services' records created a rebuttable presumption of liability, including at the summary judgment stage. Placing the burden on the defendant to justify purported violations during meal periods is hugely favorable to potential wage-and-hour plaintiffs because Donohue applies the presumption even at the summary judgment stage. That means employers defending a wage-and-hour action can no longer comfortably rely on a written policy -- they should ensures employees' meal periods are uninterrupted.
Plaintiffs relied on a concurring opinion offered in Brinker. The concurrence reasoned that employers could not interrupt but did not have to categorically monitor meal periods, concluding that the law required that meal periods should be properly recorded, and suggested that if a noncompliant meal period appeared in the employer's records, a rebuttable presumption emerged of a violation. Over the last nine years, California Courts of Appeal were split on whether or not to apply the rebuttable presumption of a violation endorsed in Brinker's concurrence.
In the second part of Donohue's decision, the court explicitly adopted Brinker's concurrence, announcing that an employer's assertion that an employee waived a meal period "is not an element that a plaintiff must disprove as part of the plaintiff's case-in-chief." The court also rejected AMN Services' argument that applying the presumption at the summary judgment stage would void Brinker's holding that the employer does not have to monitor meal periods, and create "automatic liability" for employers.
Instead, the court wrote, "Because time records are required to be accurate, it makes sense to apply a rebuttable presumption of liability when records show noncompliant meal periods. If the records are accurate, then the records reflect an employer's true liability; applying the presumption would not adversely affect an employer that has complied with meal period requirements and has maintained accurate records. If the records are incomplete or inaccurate -- for example, the records do not clearly indicate whether the employee chose to work during meal periods despite bona fide relief from duty -- then the employer can offer evidence to rebut the presumption. It is appropriate to place the burden on the employer to plead and prove, as an affirmative defense, that it genuinely relieved employees from duty during meal periods."
The court held that employers must now put on evidence that employees were compensated or chose to work, and remanded the case to the lower court to apply the presumption and determine whether the nurse recruiter class is entitled to $802,077 in lost wages.
Employer Liability After Donohue
In order to avoid liability, employers in California should refrain from rounding employees' time surrounding meal periods and, where a meal period is less than 30 minutes, ensure that they have some documentation that the employee was not only compensated appropriately for that time, but also that they chose to work. Of course, if the employee was compelled to work during their meal period, the employer should ensure that the employee was paid a meal period premium.
Before Donohue, employers defending a wage-and-hour action could rely on the presence of a written policy to prevent discovery and stop litigation at the summary judgment stage. Because of the severe penalties for noncompliance, the better practice for employers is to regularly review timesheets and electronic methods of timekeeping to ensure that employees are taking compliant meal periods. Further, employees should be counseled if their time records show evidence of noncompliance, and disciplined if noncompliance continues after counseling. California law is now clear that both infringing on meal periods and rounding meal break time will expose employers to substantial liability.