On February 25, 2021, the California Supreme Court issued its opinion in Donohue v. AMN Services, LLC, holding that:

• Employers cannot utilize the rounding of time punches in the meal period context, even if the rounding policy is neutral and even if over time it results in the employees being paid for more time worked; and
• Records showing noncompliant meal periods raise a presumption of meal period violations that employers must rebut by: (1) establishing that employees were compensated for noncompliant meal periods; or (2) establishing that compliant meal periods were provided and employees chose to work.

AMN Services, LLC (AMN), a healthcare service and staffing company, provided nurses with 30-minute meal periods beginning no later than the end of the fifth hour of work.  AMN’s meal period policy and trainings emphasized that the meal period was to be an “uninterrupted” 30-minute break, during which employees were “relieved of all job duties,” and were “free to leave the office site.”  The policy also specified that supervisors should not “impede or discourage team members from taking their breaks.”

AMN used an electronic timekeeping system which recorded employees’ time in 10-minute increments and then rounded this time to the nearest hundredth of a minute.  For example, if an employee clocked out for lunch at 11:02 a.m. and clocked in after lunch at 11:25 a.m., the timekeeping system would record the time punches as 11:00 a.m. and 11:30 a.m.  In other words, the timekeeping system would record the meal period as 30 minutes, even though the actual meal period was only 23 minutes.  If the employee did not record a compliant meal period, the timekeeping system provided a drop-down question where employees could choose a reason for the noncompliant meal period.  No penalty was paid if the employees indicated they voluntarily chose not to take a 30-minute meal period.

The California Supreme Court found that rounding should not be applied to meal periods and is inconsistent with the California Labor Code.  Specifically, because the Labor Code and IWC Wage Order set “precise time requirements” and are designed to prevent even minor infringements, the Court found that rounding is inconsistent with the purpose of the law.  The Court also found that the rounding policy is not neutral, as “[i]t never provides employees with premium pay when such pay is not owed, but it does not always trigger premium pay when such pay is owed.”

Additionally, the Court held that noncompliant meal periods raise a rebuttable presumption of meal period violations at the summary judgment stage in proceedings. The Court rejected AMN’s argument that the presumption would result in “automatic liability” for employers since the records could “reveal that there are no triable issues of material fact.” The Court noted that to rebut the presumption, AMN would need to “provide evidence that employees voluntarily chose to work during off-duty meal periods that appear in time records to be short or delayed based on unrounded time punches.”  If AMN satisfies this burden, then the burden of production would shift to Donohue (the employee) to “show that a triable issue of one or more material facts exists as to the cause of action or a defense.”

The Court’s decision can be found here.

In light of Donohue, employers with California employees should promptly examine their meal policy to determine if rounding is used, and should eliminate these practices moving forward.  Additionally, while employers are not required to police employee meal periods, they should be diligent in enforcing their meal break (and rest break!) policies.  This will ensure that supervisors are informed, that employees know the standards, and that employers can demonstrate compliance.