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In Donohue v. AMN Services, LLC, the California Supreme Court held that rounded time punch entries cannot be used to comply with California meal period laws. The Donohue Court also held that time records showing non-compliant meal periods create a presumption of meal break violations, which the employer must then rebut. While the Donohue Court expressly disallowed rounding of time punches for meal breaks only, the Court’s ruling also has potential implications on the use of rounding for purposes of calculating non-exempt employee regular and overtime pay. Consequently, employers who round time punches rounding in California should cease any rounding practices for meal break compliance purposes, and all employers should re-evaluate their time and meal break record-keeping practices.
California’s meal break laws require employers to provide non-exempt employees with unpaid meal periods, keep accurate records of when these breaks are taken, and make a premium payment when the breaks are not provided in a compliant manner. Specifically, non-exempt employees in California generally must be provided with duty-free, uninterrupted, unpaid meal periods of at least 30 minutes if they work more than five hours in a day and a second meal break if they work more than 10 hours in a day. The first meal break must be provided beginning no later than the end of the fifth hour of an employee’s work shift and the second meal break must be provided to begin no later than the end of the tenth hour.1
While employers need not ensure employees actually take these compliant meal periods, employers cannot interfere with or discourage timely compliant meal periods. Employers who fail to provide employees with timely 30-minute meal periods must pay those employees one extra hour of pay for each workday the employer failed to provide one or more compliant meal breaks, in addition to pay for all hours worked. Employers are required to maintain accurate records showing the start and stop times of non-exempt employee meal periods.
California appellate courts have generally allowed employers to round employee time punches to the nearest time increment (e.g., ten minutes or tenth or quarter-hour), for purposes of calculating non-exempt employee regular and overtime pay, provided the rounding practice is both neutral on its face and as applied. See, See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889. The practice must round both up and down and cannot result in under-compensating employees over time. Neither the See’s case nor subsequent rounding cases dealt with rounding in the meal break context.
In Donohue, the employer, a healthcare staffing firm, maintained electronic time entries for its non-exempt employees. Electronic entries were rounded to the nearest 10-minute increment in its “Team Time” recording system. The employer used the time entries to compute total hours worked and overtime, to keep record of meal periods, and identify when the extra hour’s pay for non-compliant meal periods would be due. When the rounded time entries showed that the meal break was missed, started late, or was less than 30 minutes, a dropdown menu required the employee to identify whether the employee (1) was provided a timely and full break, but chose not to take a compliant break, or (2) was not provided a fully compliant meal break. In the latter case, the employee was paid the extra hour of pay in addition to all time worked.
Donohue brought a class action claim against her employer, AMN Services (“AMN”), alleging wage and hour violations, including meal period violations based in part on this rounding practice. The trial court granted summary judgment in favor of AMN, relying on the See’s case to conclude that a neutral rounding policy is acceptable for meal periods. The Court of Appeal agreed with the trial court.
According to the California Supreme Court, however, the lower courts and Donohue’s employer got it wrong. The Donohue Court concluded that rounding time punch entries for meal break purposes was never appropriate. The Court explained that “[t]he precision of the time requirements set out in (the meal period rules) is at odds with the imprecise calculations that rounding involves. The regulatory scheme that encompasses the meal period provisions is concerned with small amounts of time.” The hypothetical the Donohue Court set forth clarified its rationale:
Consider, for example, an employee who is provided with a 21-minute lunch from 12:04 p.m. to 12:25 p.m. Under AMN’s timekeeping system, which rounded time punches to the nearest 10-minute increment, the lunch would have been recorded as a 30-minute lunch from 12:00 p.m. to 12:30 p.m. In that scenario, an employee would have lost nine of the 30 minutes — or almost a third of the time — to which he or she was entitled, and Team Time would not have flagged the lunch as a meal period violation. Small rounding errors can amount to a significant infringement on an employee’s right to a 30-minute meal period.
After holding that rounding of time punch records for meal break purposes was never permissible, the Donohue Court turned to the effect of time records showing non-compliant meal breaks. Citing Wage Order requirements that employers maintain accurate records of meal breaks, the Donohue Court held that records showing non-compliant breaks create a rebuttable presumption of violations. Thus, it is presumed that an employee was not provided a compliant meal period when time records show a late, short, missing, or interrupted meal period. The burden then shifts to the employer to present evidence to rebut this presumption by showing, for example, that the employer-provided for the break, but the employee chose to miss, cut short, or take the break late. Notably, the Donohue Court acknowledged that the employer’s electronic timekeeping system dropdown menu for the employee to explain why the non-compliant meal break occurred (employer vs. employee caused), did reflect evidence to rebut non-compliance; however, the system used in Donohue was flawed because in rounding meal period time entries, non-compliant meal periods were not flagged by the system in the first instance. Hence, there were no records to explain the non-compliant meal breaks that the timekeeping system failed to flag. As the Donohue Court explained:
Employers may use a timekeeping system like Team Time to track meal period violations as long as the system does not round time punches. Team Time included a dropdown menu for employees to indicate whether they were provided a compliant meal period but chose to work, and the system triggered premium pay for any missed, short, or delayed meal periods due to the employer’s noncompliance. Thus, Team Time would have ensured accurate tracking of meal period violations if it had simply omitted rounding.
The Donohue Court reaffirmed an employer’s general obligation to maintain accurate records of meal periods in California, and held that the use of any method of rounding time for these records was impermissible.2 After Donohue, employers will have to present evidence to rebut a presumption of a non-compliant meal break where its records show non-compliant breaks, or presumably, where the employer failed to maintain records where required. To address this presumption, employers would be well served to have procedures in place to promptly flag potentially non-compliant breaks and seek information to determine why the break was missed. If it was missed due to the employer’s action or job demands, the employer should pay one-hour premium pay for the non-compliant break. If, however, the employer confirms the employee chose to not take the compliant break, the employer is not required to pay the extra hour of premium pay. In this situation, the employer should document that it was the employee’s decision to not take the meal break it had otherwise provided. The employer should additionally remind all involved of the importance of taking timely and compliant meal periods.
Employers should also consider re-evaluating the utility of rounding in California for any time-keeping purposes. While the Donohue Court’s holding was limited to meal periods, the Court expressly did not decide whether rounding for other purposes was a valid practice. Its comment with regard to the need to round time entries is worth noting: “As technology continues to evolve, the practical advantages of rounding policies may diminish further.”
If you have questions or concerns about this case, please contact the Rogers Joseph O’Donnell attorney with whom you regularly work or a member of our employment law team at employmentlaw@rjo.com. We are here to help.
Footnotes:
1 Non-exempt employees who work less than six hours on any given day may, by mutual consent, agree to waive their meal period. Non-exempt employees that work no more than 12 hours in one workday may also, by mutual consent, waive their second meal period that day, so long as they have not waived their first meal period.
2 There may be exceptions to this general rule. For instance, the Wage Order requirement to maintain meal break records provides that “meal periods during which operations cease… need not be recorded.”
