In light of the recent ruling, employers in California should be aware of the risks involved in using rounded time to determine whether an employee took a late or short meal break.

Kennedy Donohue filed a class action lawsuit against her employer, AMN Services, LLC (AMN), alleging that that AMN failed to provide her with compliant meal periods. Donohue claimed that because AMN rounded time punches to the nearest 10-minute increment, AMN had failed to account for and pay required meal period premiums where an employee’s unrounded, actual meal period either began late (after the fifth hour of work) or lasted less than 30 minutes. For example, if an employee clocked out for lunch at 11:02 am and clocked in after lunch at 11:26 am, AMN would have recorded the time punches as 11:00 am and 11:30 am. If an employee clocked in for work at 6:59 am and clocked out for lunch at 12:04 pm, AMN would have rounded the time punches to 7:00 am and 12:00 pm. In both cases, rounded time would suggest a compliant meal break, but unrounded time could suggest a break that was not correctly provided.

Before September 2012, whenever AMN’s time records showed a late, short, or unrecorded meal period, AMN assumed a meal period violation and paid the employee a meal period premium. After September 2012, AMN added a dropdown menu feature to its timekeeping system. When the clocks suggested a potentially noncompliant meal, the system would prompt an employee response regarding whether the employee voluntarily chose to work through the provided meal period opportunity. In 2015, AMN stopped rounding and recorded time to the minute.

The trial court certified a class of non-exempt AMN employees, but then granted AMN’s summary judgment motion. The trial court found that AMN’s rounding policy fairly compensated employees over time and that there was insufficient evidence that AMN had a policy or practice of denying employees compliant meal periods. The Court of Appeal affirmed.

THE CALIFORNIA SUPREME COURT DECISION

The Supreme Court made two primary holdings:

First, the decision prohibits rounding of time punches for purposes of determining the start time or duration of meal breaks. With respect to AMN’s practice of automatically paying premiums, the court noted that although such a practice “may have resulted in some overcompensation” by automatically paying meal period premiums for meal periods that employees had voluntarily chosen not to take, it still “did not properly account for meal periods that were short or delayed based on actual time punches but did not appear as short or delayed under the rounding policy.” The court held that AMN would be liable for meal period premiums in such instances regardless of any incidental overcompensation created by automatic payment of meal premiums.

With respect to AMN’s use of dropdown prompts to explain late, short, or unrecorded meal periods, the court noted that the system “would have ensured accurate tracking of meal period violations if it had simply omitted rounding.” The court also foreclosed AMN’s attempt to avoid meal premium liability with biweekly employee certifications that AMN had provided the opportunity to take all breaks other than those reported on employee time sheets. The court explained that such certifications did not cure potential meal period violations where “employees would not have known about potentially noncompliant meal periods that [the timekeeping system] did not flag” due to the use of rounded time punches.

Second, the court held that a time record showing a late, short, or unrecorded meal break creates a rebuttable presumption that a meal break violation occurred and that a meal premium is owed. The court explained that, for an employer moving for summary judgment, to “rebut the presumption of noncompliance arising from the time records, [the employer] 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.”

IMPLICATIONS

The use of time punches to determine whether an employee took a late or short meal period must rely on actual, not rounded, time punches. Employers who continue to round time punches should also consider and evaluate with counsel the risks that time rounding may present in various scenarios.

Additionally, employers should ensure that they have a system in place for determining whether to pay a meal premium based on time records showing a missed, late, or short meal period and should consider the value of using a dropdown menu to allow employees to record when they have voluntarily elected not to take a meal period and/or rest period. Other mitigating practices in terms of the timing and lengths of mandatory meal periods should also be considered and discussed with counsel.

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