In a recent wage and hour class action, the California Supreme Court ruled that employers may use timekeeping policies that round time punches for calculating time worked, but employers may not use timekeeping policies that round punches for meal periods. Given the common use of rounding in timekeeping, employers should take note of this distinction.
Wage Order No. 4 and California Labor Code section 512, subdivision (a), require employers to provide employees a meal period of at least 30 minutes no later than the fifth consecutive hour worked. If an employee works more than 10 hours in a day, the employer must provide a second meal period no later than the tenth hour worked. An employer will satisfy these requirements if, during the meal break, it relieves the employee of all duties and does not discourage or prevent the employee from taking an uninterrupted break.
If an employer fails to comply with Wage Order No. 4, it must pay the employee a premium of one hour of pay at the employee’s regular rate of compensation for each workday that a meal period was not provided. (Wage Order No. 4, § 11(B); Cal. Labor Code § 226.7, subd. (c).) No meal period violation is incurred, however, if the employee has the opportunity to take an unimpeded meal break but chooses to work through, delay, or shorten the meal period.
In Donohue v. AMN Services, LLC, the plaintiff filed a class action against a healthcare services and staffing company on behalf of its nonexempt California nurse recruiter employees. Among other alleged wage and hour violations, the plaintiff claimed AMN’s electronic timekeeping system improperly rounded time punches to the nearest 10-minute increment. As an illustration, if an employee clocked out for lunch at 11:02 a.m. and clocked back in at 11:25 a.m., the system would round to 11:00 a.m. and 11:30 a.m. The system would thus record the noncompliant, 23-minute meal period as a compliant, 30-minute meal period.
The trial court and the California Court of Appeal sided with AMN, finding nothing in Wage Order No. 4 or Labor Code section 512 prohibited rounding time punches for meal periods, particularly where California permits employers to use policies that round time punches for calculating time worked so long as they meet certain requirements.
Yet the California Supreme Court reversed. The Court distinguished rounding punches for meal breaks from rounding punches for time worked. When calculating wages, “counting slightly fewer [minutes] one day can be made up by counting a few more minutes another day.” So for that reason, as well as efficiency concerns, the Court reasoned that employers may permissibly use rounding policies for calculating hours worked if they are neutrally applied and do not result, on average, in undercompensating employees. In contrast, “a shorter or delayed meal period one day cannot be offset by a longer or earlier meal period another day.”
To that end, the Court emphasized that California’s meal period regulations are concerned with the small amounts of time that protect employees’ health, safety, and well-being throughout the workday. In the Court’s view, shortening a meal period by a few minutes may increase risks of stress and fatigue for workers who spend the day on their feet or engaged in manual labor. And a few minutes can make “a significant difference” for workers who use their 30-minute meal break for “important personal tasks” like making appointments or giving instructions to a babysitter. Thus, the regulations establish precise time requirements for meal periods, and the meal period premium compensates “employees for their injuries” and incentivizes “employers to comply with labor standards. This new decision will require employers to review and possibly modify time clock procedures to ensure compliance of when rounding is and is not permitted.
Turning to the next issue, the California Supreme Court held that time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations. Because employers have a duty to maintain accurate records of meal periods, the Court reasoned, “it makes sense to apply a rebuttable presumption of liability when records show noncompliant meal periods.” If the records are accurate, they “reflect an employer’s true liability” for meal period violations. But if the plaintiff submits inaccurate or incomplete records, the employer can rebut the presumption with evidence that the employee chose to take a short or delayed meal period or no meal period at all.
In light of the California Supreme Court’s holding in Donohue, employers should check their timekeeping systems to ensure any rounding features are turned off for meal periods and review any policies or procedures regarding meal periods for inconsistencies with this decision.