AMN Services, LLC, (AMN) is a healthcare service and staffing company that recruits nurses for temporary contract assignments. AMN maintains a policy that provides an uninterrupted 30-minute meal period beginning no later than the end of the fifth hour of work during which employees were “relieved of all job duties” and were “free to leave the office site.” AMN uses a timekeeping software called Team Time, which rounds all employee time entries to the nearest 10-minute increment.
For example, if an employee arrived at work at 6:59 am and clocked out for lunch at 12:04 pm, Team Time would round the entries to 7:00 am and 12:00 pm respectively. Further, if that same employee (who clocked out for lunch at 12:04 pm), then clocked back in at 12:25 pm, Team Time would round the employee’s entries to 12:00 pm and 12:30 pm, respectively. As a result, Team Time would show that this employee went to lunch after being at work for 5 hours, when the employee was actually at work for 5 hours and 5 minutes. Team Time would further show that the employee received a 30-minute meal break when the employee only actually received a 21-minute meal break.
Under the California Labor Code, 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 tenth hour of work. The California Labor Code further requires that if an employer does not provide an employee with a compliant meal period, then the employer must pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal period is not provided (Premium Wages).
AMN employee, Kennedy Donahue (Donahue), brought a class-action lawsuit against AMN, alleging that the way Team Time rounded employees’ time entries resulted in AMN denying its employees compliant meal periods and failing to pay employees the Premium Wages they were owed under the Labor Code when the employees did not receive a compliant meal period.
The trial court found in AMN’s favor and determined that the rounding practice for meal periods was proper and fairly compensated employees over time. The trial court further noted that there was insufficient evidence that supervisors at AMN prevented employees from taking compliant meal periods. Donahue appealed.
On appeal, the Court of Appeal affirmed the trial court’s decision and generally agreed with the trial court’s rationale. The Court of Appeal additionally noted that the plain text of the Labor Code and associated wage order does not prohibit rounding for meal periods. Donahue appealed, and the California Supreme Court granted review to address two questions of law relating to her meal period claim. First, whether an employer may properly round time punches for meal periods. Second, whether time records showing non-compliant meal periods raise a rebuttable presumption of meal period violations.
The California Supreme Court first held that employers cannot round time punches by adjusting the hours that an employee has actually worked to the nearest preset time increment in the meal period context. The Court explained that rounding time punches for meal periods is inconsistent with the purposes of the Labor Code and associated wage order, which sets precise time requirements for meal periods (i.e., each meal period must be “not less than 30 minutes,” and no employee shall work “more than five hours per day” or “more than 10 hours per day” without being provided with a meal period).
The Court further noted that the Premium Wages requirement for missed meal periods confirms that precision is required and rounding is inconsistent with the intent behind the meal period requirements. Collectively, the meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective. The Court opined that meal periods serve an important role in an employees’ health, safety, and well-being, and shortening or delaying meal periods by even a few minutes may have negative impacts on employees.
The Court next held that time records showing non-compliant meal periods raise a rebuttable presumption of meal period violations. An employer may rebut the presumption by providing evidence that they provided employees bona fide relief from duty or proper compensation. Employers have a duty to ensure that they provide each employee with bona fide relief from duty and to accurately reflect this in the employer’s time records. Otherwise, the employer must pay the employee premium wages for any non-compliant meal period. Nevertheless, an employer will generally not be liable if it provides employees with the opportunity to take a compliant meal period and the employee chooses to take a short or delayed meal period or no meal period at all. Further, employers are under no obligation to police meal periods to make sure no work is performed.
The Court held that AMN improperly used rounded time punches to track meal periods, which did not account for short or delayed meal periods, and determined that the trial court and the parties should address the issue of whether AMN produced sufficient evidence to rebut the presumption of meal period violations. Accordingly, the Court reversed the judgment and remanded the matter to the trial court to conduct further proceedings consistent with its opinion.
Donohue v. AMN Services, LLC (2021) 11 Cal.5th 58.
Note:
This was a case of the first impression for the California Supreme Court, which means that the Court had never before analyzed or reached a decision on this topic. In light of this case, any employers who have a practice of rounding employees’ time punches for meal periods should cease doing so and should revise those policies. Employers should also note that the statute of limitations for violations under the Labor Code is three years.