Los Angeles, Calif. (March 15, 2021) - A recent decision from a unanimous California Supreme Court provides further warning to employers against utilizing rounding policies with respect to timekeeping systems. Specifically, the court held that: (1) employers cannot engage in the practice of rounding time punches in the meal period context; and (2) time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage.
Donohue v. AMN Services, LLC
In Donohue v. AMN Services, LLC, the employer's timekeeping system rounded time punches to the nearest 10-minute increment, including 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 have recorded the time punches at 11:00 a.m. and 11:30 a.m., respectively. Although the actual meal period was 23 minutes, the electronic timekeeping system would have recorded the meal period as a compliant, 30-minute meal period, thereby failing to record a meal period violation and trigger automatic payment of a meal period premium.
If the employee's rounded time punches reflected a missed, short, or late meal period, then a dropdown menu would appear prompting the employee to select one of three options: (1) the employee was provided with a timely 30-minute break but chose not to take it; (2) the employee was provided with a timely 30-minute break but chose to take a shorter/later break; or (3) the employee was not provided with a timely 30-minute break. If the employee chose the third option, then the employer assumed there had been a meal period violation and paid the employee a premium wage. Notably, the dropdown menu was based on the rounded time punches, so the menu did not appear for those meal periods which were actually shorter than 30 minutes.
Rejection of Rounding Policy for Meal Periods
In seeking summary judgment, the employer's expert witness did not account for meal period premium wages that would have been paid based on actual meal period times. Instead, the employer argued that the rounding policy evened out over time and resulted in overcompensation of its employees. The court stressed that it was not concerned with whether the employer's rounding policy resulted in the proper compensation of employees for all time worked. Rather, the court focused on whether the employer's rounding policy resulted in the proper payment of premium wages for meal period violations. The court declined to address whether employers could round hours worked, but ultimately held that employers cannot round time punches in the context of meal periods.
In finding the practice of rounding time punches for meal periods inconsistent with the purpose of the Labor Code provisions and the applicable IWC wage order, the court noted that even minor infringements of the meal period trigger the premium pay obligation. The regulatory scheme that encompasses the meal period provisions is concerned with small amounts of time, e.g., “not less than 30 minutes” or “five hours per day” or “ten hours per day” – which is at odds with the imprecise calculations that rounding involves.
The court made reference to a recent decision, Troester v. Starbucks, in emphasizing the employer's obligation to capture small, or arguably de minimus increments of time, noting the advanced technological capabilities of electronic timekeeping systems. This seems to insinuate that, if an employer has an electronic timekeeping system at its disposal, there is no excuse for the employer not to capture accurate time punches for its employees. This comment-in-passing is part of a legal trend against rounding any time punches.
Rebuttable Presumption of Meal Period Violations
The court also held that time records showing noncompliant meal periods raised a rebuttable presumption of meal period violations at the summary judgment stage. The court took pains to state that the presumption does not result in “automatic liability” and that employers may overcome the presumption by, for example, producing evidence that employees either voluntarily chose to take noncompliant meal periods or were compensated with a meal period premium for noncompliant meal periods. Nevertheless, in articulating this standard, the court delivered a victory to plaintiffs' attorneys who, ever since the seminal Brinker Restaurant Corp. v. Superior Court case (holding that employers must provide employees with an opportunity to take breaks but need not police employees to ensure that they do so), have argued that Justice Werdegar's concurrence requires employers to plead and prove employee waiver of compliant breaks as an affirmative defense.
Takeaways for Best Practices
Employers should immediately review their meal period policies and practices to ensure compliance with the new Donohue standards. Employers who currently round meal periods must stop doing so and instead should precisely record the start and stop times of the meal period. Employers who currently round non-meal period time entries should also consider transitioning to a non-rounding practice, as the trend in California is against rounding of any kind. Finally, in light of this decision and the presumption of meal period violations, it is critical that employers implement policies and practices to tighten meal period compliance, such as automatically paying employees a premium for all missed, short, or late meal periods.
Originally Published by Lewis Brisbois, March 2021
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