California Supreme Court Nixes Meal Period Rounding and Places Burden on Employers to Rebut Presumption of Liability for Missed, Short, or Late Recorded Meal Periods

03.02.2021

In an opinion released on February 25, 2021, the California Supreme Court held that:

(1) employers may not round employee time punches for meal periods; and

(2) employee time records showing missed, late, or short meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage.

Donohue v. AMN Servs., LLC (2021) No. S253677, 2021 WL 728871

Background

Plaintiff Kennedy Donohue was employed in the San Diego office of AMN Services (a healthcare services and staffing company) from September 2012 to February 2014. AMN’s computer-based timekeeping system rounded the time entries for Donahue and other employees’ meal periods to the nearest 10-minute increment. Subsequent analysis by AMN’s expert witness, a labor economist and statistician, found that the policy did not disfavor the employees and the average meal period length during the class period was actually 45.6 minutes. In addition, AMN’s written meal period policy stated that meal periods were provided in accordance with California law and that employees were required to accurately record their meal periods. AMN also had a policy of automatically paying meal period premiums whenever an employee’s time record indicated that the employee had not taken a full 30-minute meal period within the required time frame.

Shortly after Donohue’s hire, AMN altered its practices such that, whenever an employee recorded a missed, short, or delayed meal period, a drop-down menu would appear and ask the employee to indicate: (1) whether they had the opportunity to take a 30-minute meal period, but chose not to; (2) whether they had the opportunity to take a timely meal period, but chose not to; or (3) whether they were not provided a compliant meal period. Unfortunately for AMN, this system did not account for meal periods that were or appeared recorded as short or delayed based on AMN’s rounding policy, so the dropdown menu did not pop up so as to address this category of meal periods.

The Court of Appeal affirmed the trial court’s judgment in favor of AMN and, in doing so, relied on See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, which held that a time rounding policy that is both neutral on its face and as applied is lawful. The Court of Appeal rejected Donohue’s argument that AMN’s rounding policy could not be applied to meal period punches and reasoned that permissible time rounding for employees clocking in/out of work should similarly extend to meal periods.

California Supreme Court’s Decision

In its decision reversing the Court of Appeal’s decision, the California Supreme Court noted that the precision of the time requirements for meal periods, as set out in Labor Code section 512 and Wage Order No. 4 — “not less than 30 minutes” and “five hours per day” or “ten hours per day” — is at odds with the imprecise calculations that rounding involves. Consequently, the Court interjected and reasoned that shortening or delaying a meal period by even a few minutes as a result of rounding may exacerbate risks associated with stress or fatigue, especially for workers who are on their feet most of the day, who perform manual labor or repetitive tasks, or those who wish to eat an unhurried meal or take care of personal tasks before returning to work.

Another troubling aspect of the decision was the Court’s adoption of the concurring opinion by Justice Werdegar’s in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004. Long heralded by plaintiffs’ counsel eager to utilize employee time records as proof of meal period violations, Justice Werdegar explained in that opinion 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.” (Id., 53 Cal.4th at p. 1053 (conc. opn. of Werdegar, J.).) Instead, the assertion is “an affirmative defense,” and “the burden is on the employer, as the party asserting waiver, to plead and prove it.” (Ibid.) Thus, according to Justice Werdegar, if an employer’s records show no meal period for a given shift over five hours, a rebuttable presumption arises that the employee was not relieved of duty and no meal period was provided.

Although AMN argued that such a presumption should only apply to records showing missed meal periods, insofar as the presumption derives from an employer’s duty to maintain accurate records of meal periods, the Court was unpersuaded and found that the presumption applies to records showing short and late/delayed meal periods, as well. As the court explained, because time records are required to be accurate, it makes sense to apply a rebuttable presumption of liability when records show noncompliant meal periods because “where the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee.” (Id. at p. 1053, fn. 1.)

Seemingly aware that its decision is at odds with the other tenet in Brinker – that employers need not police meal periods – the Court reiterated that an employer is liable only if it does not provide an employee with the opportunity to take a compliant meal period, and that there is still no requirement to police meal periods to make sure no work is performed. Accordingly, employers should be aware that if employee time records show seemingly noncompliant meal periods, while this does not automatically establish liability, it does create a rebuttable presumption of liability. An employer may rebut this presumption with evidence of bona fide relief from duty for the meal period – such as through the use of timekeeping system that accurately tracks meal period violations (but only if the system does not round time punches) or signed employee statements that they were provided a compliant meal period – or premium pay in lieu thereof. What remains to be determined now is how employers can implement such policies and procedures in real time to allow them to address, and hopefully eliminate, such issues in a practical and cost efficient manner in order to rebut the presumption for suspected violations that may have occurred months or years prior to the commencement of any litigation.

Employer Takeaways

In light of this decision, California employers should take heed and immediately revisit and review any existing timekeeping policies that: (1) round employee time entries for meal periods – and eliminate any rounding of meal periods; and (2) implement more stringent meal period requirements, ensuring timely and compliant meal periods are provided and accurately recorded, and meal period premiums are paid. While the Court stopped short of prohibiting all time rounding, employers that continue to utilize time rounding will face an increased risk of litigation concerning their rounding policies and practices.

If you have questions about how this decision impacts your business or your time rounding policies and practices, consult with the authors or your usual trusted counsel at AALRR.