On Thursday, February 25, 2021, the California Supreme Court in Kennedy Donohue v. AMN Services, LLC, effectively ended the usage of time-punch rounding policies in the context of employee meal periods. This decision will have a major impact for any employers utilizing time-punch rounding applications that track and round employee time punches for employee meal periods.
Defendant AMN Services, LLC (“AMN”) is a healthcare servicing and staffing company that utilized an electronic timekeeping system that tracked an employee’s compensable time throughout the workday. The timekeeping system incorporated a rounding system, which rounded employee time punches to the nearest 10-minute increment. This rounding occurred at the beginning and end of each shift, as well as when the employees clocked in and out for meal periods.
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 meal period time punches as 11:00 a.m. and 11:30 a.m. Similarly, if an employee clocked in for work at 6:59 a.m. and clocked out for lunch at 12:04 p.m., the timekeeping system would round the time punches to 7:00 a.m. and 12:00 p.m. In this example the actual meal period is “short” (less than 30 minutes), and “late” (began later than the end of the fifth hour of work), but the rounded punches give the appearance of compliance. AMN relied on the rounded time punches to determine if a meal period was short or delayed.
Kennedy Donohue, the plaintiff in this case, filed a class action lawsuit against AMN for various wage and hour violations, including claims for short, delayed, and missed meal periods. Donohue argued that AMN denied its employees compliant meal periods because it improperly rounded time records for meal periods through its timekeeping system. Donohue further argued it discouraged employees from taking full and timely lunches, which also resulted in the denial of premium wages for the noncompliant meal periods.
Upon review, the California Supreme Court considered two legal issues: (1) whether employers like AMN can engage in the practice of rounding time punches in the meal period context; and (2) whether employer records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgement stage of litigation.
With respect to the first issue, the Court held that employers cannot engage in the practice of rounding time punches in the meal period context. The Court determined that, although time rounding in other contexts (for example, at the start and end of a shift for purposes of determining an employee’s hours worked) was generally permitted under federal law and under prior California decisions, the practice of rounding in the meal period context was incompatible with promoting strict adherence to sections of the Labor Code intended to safeguard the employees’ health, safety, and well-being.
With respect to the second issue, the Court held that employer records showing noncompliant meal periods raise a rebuttable presumption of meal period violations at summary judgment. Restated, if an employer’s records show noncompliant meal periods, there is a presumption the employee was not provided with a legally complaint meal period. As a result, the employer must proffer evidence to the court that the employee was actually provided with a legally compliant meal period and bona fide relief for duty during such meal period, or proper compensation, as contemplated by Labor Code section 226.7.
Impact on Employers
In light of this decision, employers should review their time keeping practices to determine if their timekeeping policies or systems round employee time punches in the meal period context. If so, they should promptly seek competent legal counsel to assist in bringing their policies and procedures into compliance with this recent decision. That said, it is important to remember that this decision does not render all time punch rounding improper (i.e., at the beginning or end of an employee’s shift), it simply focuses on rounding of time punches for employee meal breaks.
One final note, employers should be mindful about how employee time records are kept or electronically monitored moving forward. While the Court reiterated its previous ruling in Brinker Restaurant Corp. v. Superior Court, (2012) 53 Cal. 4th 1004, 1041 - that it is not incumbent on the employer to “police meal breaks” - the Court did note that its ruling may require employers to give employees a mechanism for recording their meal periods and to “ensure that employees are using that mechanism properly.” Take this opportunity to review timekeeping practices and consult with competent legal counsel to ensure that those policies and procedures are compliant with this new California Supreme Court decision, as well as the other myriad of laws that place employers at risk of litigation. A compliance review now will save countless dollars and headaches later.