California provides us with another predictable reminder that the right to compliant meal periods is sacrosanct for employees of the Golden State. On February 25, 2021, in Donohue v. AMN Services, LLC, the California Supreme Court reversed the Fourth Appellate District and set forth two clear rules: (1) employers are not permitted to round time records when determining if employees are entitled to meal premium pay, and (2) it is the employer’s burden to show that compliant meal periods were provided to employees if the time records show otherwise.
The trial court certified a class of nonexempt California nurse recruiters employed by Defendant with respect to the meal period claim. Defendant used an electronic timekeeping system to track its employees’ compensable time. The software rounded time punches to the nearest 10-minute increment (e.g., if the meal period starts at 11:58 AM it is rounded to 12:00 PM; if the meal period starts at 12:02 PM it is rounded to 12:00 PM). With the rounding function, meal periods that start after the end of the fifth hour of work could appear to start before the end of the fifth hour of work, and meal periods of less than 30 minutes could round to 30 minutes. Additionally, based on the rounded time records, the software provided a dropdown menu and employees were prompted to select one of three options when a meal period violation was detected: (1) I chose not to take my meal period before the end of my fifth hour of work; (2) I chose to take a shorter/later meal period; (3) I was not provided the opportunity to take a compliant meal period. If the employees selected the third option, meal premium pay would be automatically paid. With the rounding function, employees were not always prompted to declare a violation for meal periods that were actually missed, short, or delayed. For example, if the meal period is 28 minutes and rounded to 30 minutes, the software would not provide the dropdown menu to enable employees to declare a meal period violation and receive meal premium pay.
Defendant argued that its neutral rounding practice was permissible under the Fair Labor Standards Act ("FLSA") because it did not result in a failure to compensate employees over a period of time. On summary judgment, the Court of Appeal affirmed that the rounding policy was neutral and permissible. However, the FLSA does not govern meal periods, and the California Supreme Court distinguished the compensation of wages with rounding from the issue of whether meal premium pay was properly paid for all meal period violations. California’s Labor Code and Wage Orders set a clear statutory requirement for 30 minute meal periods, and minor infringements of meal periods due to rounding trigger the employer’s premium pay obligation.
The California Supreme Court also reiterated that it is the employer’s duty to maintain accurate time records for meal periods. Where time records show meal period violations, there is a rebuttable presumption that employees are owed meal premium pay. The burden is then on the employer to present evidence that employees were provided compliant meal periods, and the employees knowingly and voluntarily chose to work. This rebuttable presumption has the practical effect of underscoring the employer’s duty to consistently ensure employees accurately record the beginning and end of every meal period.
Using this opportunity to echo its long stance that California liberally construes the Labor Code and wage orders to favor protection of employees, the California Supreme Court emphasized that meal periods are part of the remedial worker protection framework to protect the health and safety of employees. It further took this opportunity to foreshadow that as technology continues to evolve, the practical advantages of rounding policies may diminish further.
With this latest opinion, California employers should consider an audit of their time records, refresh management training for meal periods and timekeeping, and explore available options for employees to declare a voluntary waiver for missed, short, and delayed meal periods.