California Supreme Court Rules Rounding Practices for Meal Times Illegal

fork and knife on a clock

The California Supreme Court recently ruled that employers may not apply their rounding practices to meal period start and end times. In Donohue v. AMN Servs., LLC, the Supreme Court stated that under California law, employers must generally provide employees with one 30-minute meal period that begins no later than the end of the fifth hour of work and another 30-minute meal period that begins no later than the end of the 10th hour of work. Rounding is adjusting the hours that an employee has actually worked to the nearest preset time increment. Here, it applied to employees’ meal periods.

The Case Involved Nurse Recruiters

Defendant AMN Services, LLC (AMN) is a health care services and staffing company that recruits nurses for temporary assignments. Between September 2012 and February 2014, the plaintiff Kennedy Donohue worked as a nurse recruiter at their San Diego office. She didn’t have predetermined shifts but was expected to work eight hours a day. Per AMN’s company policy, nurse recruiters were provided with 30-minute meal periods beginning no later than the end of the fifth hour of work. The company’s policy and trainings emphasized that the meal period was an “uninterrupted 30 minute” break during which employees were “relieved of all job duties,” were “free to leave the office site,” and “control[led] the time.” The policy also specified that supervisors shouldn’t “impede or discourage team members from taking their break.”

Until April 2015, AMN used an electronic timekeeping system called Team Time to track its employees’ work hours. Employees used their work PCs to punch in and out of Team Time, including at the beginning of the day, at the beginning of lunch, at the end of lunch, and at the end of the day. Employees could also ask to manually adjust any inaccurate time punches. For purposes of calculating work time and compensation, Team Time rounded the time punches to the nearest 10-minute increment. So, if an employee clocked out for lunch at 11:02 a.m. and clocked in after lunch at 11:25 a.m., the program record the time punches as 11:00 a.m. and 11:30 a.m. Thus, even though the actual meal period was 23 minutes, Team Time would record the lunch as 30 minutes. Likewise, if an employee clocked in for work at 6:59 a.m. and clocked out for lunch at 12:04 p.m., Team Time would have rounded the time punches to 7:00 a.m. and 12:00 p.m. In that case, the actual meal period started after five hours and five minutes of work, but the program would record their lunch as starting after exactly five hours of work.

The company also used the program to manage potentially non-compliant meal periods. Before September 2012, whenever Team Time records showed a missed meal period, a meal period shorter than 30 minutes, or a meal period taken after five hours of work, AMN assumed there had been a meal period violation and paid the employee a premium wage. In September 2012, AMN added a feature to the program to comply with the meal period requirements stated in a 2012 California Supreme Court decision.

That case held that when an employee recorded a missed, short, or delayed meal period, a drop-down menu would appear on Team Time prompting the employee to choose one of three options:

  • “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose not to”;
  • “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose to take a shorter/later break”; or
  • “I was not provided an opportunity to take a 30 min break before the end of my 5th hour of work.”

The employee was required to select an option before submitting the timesheet at the end of the pay period. If the employee chose the first or second option, then AMN assumed the employee was provided with a compliant meal period but voluntarily chose not to take one. As a result, the employee didn’t get premium pay for a meal period violation. If the employee chose the third option, the company assumed there had been a meal period violation and paid the employee a premium wage. Plus, at the end of each biweekly pay period, employees were required to sign a certification statement:

By submitting this timesheet, I am certifying that I have reviewed the time entries I made and confirm they are true and accurate. I am also confirming that I was provided the opportunity to take all meal breaks to which I was entitled, or, if not, I have reported on this timesheet that I was not provided the opportunity to take all such meal breaks.

AMN relied on the rounded time punches generated by Team Time to determine whether a meal period was short or delayed. So, in the example above, where a 23-minute lunch starting at 11:02 a.m. and ending at 11:25 a.m. was recorded as a 30-minute lunch starting at 11:00 a.m. and ending at 11:30 a.m., before September 2012, AMN wouldn’t have paid a premium wage for this lunch because it would’ve appeared as a full 30-minute meal period in the records. And after September 2012, the drop-down menu wouldn’t have been triggered for this lunch because it would have appeared as a compliant meal period on the program. Thus, Team Time wouldn’t have prompted the employee taking the lunch to indicate whether there had been a meal period violation.

In April 2014, Donohue filed a class action lawsuit against AMN, alleging a number of wage and hour violations, including the meal period claim at issue. Donohue filed a motion for summary adjudication. As to the meal period claim, Donohue argued that the company denied its employees compliant meal periods, improperly rounded time records for meal periods using Team Time, and failed to pay premium wages for non-compliant meal periods. To support the motion, she submitted her testimony that AMN had an office culture that discouraged employees from taking full and timely lunches. Also, her expert witness, a statistics professor, testified that the use of Team Time resulted in the denial of premium wages for 40,110 short lunches and 6,651 delayed lunches during the class period, which totaled more than $800,000.

AMN’s expert witness, a labor economist and statistician, explained that because AMN’s rounding policy sometimes rounded meal period times up and sometimes down, the company sometimes paid employees for a few extra minutes they didn’t work and sometimes didn’t pay them for a few minutes that they did work. The expert also stated that based on the nurse recruiters’ actual time punches, the average length of a meal period during the class period was 45.6 minutes.

The Lower Court Decisions

The trial court held in favor of AMN, finding that there was insufficient evidence that AMN had a policy or practice of denying employees compliant meal periods, and that its meal period policy complied with California law, and its practice of rounding the time punches for meal periods was proper.

The judge said that even if no case has ever applied rounding to meal periods, “the rationale behind allowing rounding for work time would be the same for meal break time.” According to the court, AMN’s rounding policy fairly compensated employees over time, and there was insufficient evidence that supervisors at AMN prevented employees from taking compliant meal periods.

The Court of Appeals affirmed and agreed with the trial court’s reasoning as to the meal period claim and decided that it was proper for AMN to round time punches for meal periods.

The Supreme Court granted review to address the questions of law on the meal period claim: whether an employer may properly round time punches for meal periods.

The Supreme Court examined whether the practice of rounding time punches, which was developed for the purpose of calculating wages, can be properly applied to the meal period context. The Supreme Court said the issue was whether the company’s rounding policy resulted in the proper payment of premium wages for meal period violations. AMN’s claim that it overpaid the class based on time worked didn’t address this issue, the Court said.

AMN claimed that the evidence demonstrated that no meal period violations occurred for which premium wages weren’t paid. The company asserted that this evidence, regardless of its use of rounding, supported judgment in its favor on the meal period claim.

The Supreme Court explained that California’s Industrial Welfare Commission’s Wage Order No. 4, which applies to professional, clerical, mechanical, and similar occupations, applied to the certified class of nurse recruiters in this dispute. This wage order and the relevant statute provide: “No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes … . Unless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an ‘on duty’ meal period and counted as time worked.”

This means that employers must generally provide “a first meal period [of at least 30 minutes] no later than the end of an employee’s fifth hour of work, and a second meal period [of at least 30 minutes] no later than the end of an employee’s 10th hour of work.” In the 2012 Brinker decision, the Supreme Court clarified that an “employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so. […] [T]he employer is not obligated to police meal breaks and ensure no work thereafter is performed.”

The Supreme Court explained that there’s no meal period violation if an employee voluntarily chooses to work during a meal period after the employer has relieved the employee of all duty. The voluntariness of an employee’s choice matters because “an employer may not undermine a formal policy of providing meal breaks by pressuring employees to perform their duties in ways that omit breaks,” the Court said, quoting Brinker.

If an employer doesn’t provide an employee with a compliant meal period, then the employer must provide the employee with premium pay for the violation. Thus, even a minor infringement of the meal period triggers the premium pay obligation, the Supreme Court held. In addition to providing premium pay, the employer must compensate the employee for any time worked during the meal period if “it ‘knew or reasonably should have known that the worker was working through the authorized meal period.’” To avoid liability, an employer must provide its employees with full and timely meal periods whenever those meal periods are required.

As a result, the California Supreme Court ruled that the practice of rounding time punches for meal periods is inconsistent with the purpose of the Labor Code provisions and the IWC’s wage order. The precision of the time requirements set out in Labor Code Wage Order No. 4 is at odds with the imprecise calculations that rounding involves. The regulatory scheme that encompasses the meal period provisions is concerned with small amounts of time.

“Given the relatively short length of a 30-minute meal period, the potential incursion that might result from rounding is significant,” the court said.

Even relatively minor infringements on meal periods can cause substantial burdens to the employee. As a consequence, the judgment of the Court of Appeal was reversed. Donohue v. AMN Servs., LLC, 11 Cal. 5th 58, 79 (Cal. 2021).

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