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On Thursday, February 25, 2021, the California Supreme Court issued a long-awaited ruling addressing legal standards for meal period violations in Donohue v. AMN Services, LLC. In its opinion, the court required strict compliance for providing meal periods, and specifically condemned the practice of rounding to the nearest time increment for meal periods. The court also clarified that a rebuttable presumption of liability applies when time records show shortened, delayed, or missed meal periods.

In Donahue, the plaintiff filed a class action against her employer for failure to pay premium wages for meal periods that did not strictly comply with California’s requirement to provide a 30-minute meal period within the first five hours of work. Among the issues raised was the contention that the employer’s time-capturing policy rounded time punches to the nearest 10-minute increment, resulting in meal periods that were as short as 22 minutes being rounded up to 30 minutes. The employer’s timekeeping software also utilized drop-down menus for noncompliant meal periods: after a missed, short, or delayed meal period, the timekeeping software prompted three options to employees, which put the employer on notice for premium pay obligations. The drop-down menu did not, however, register when a meal period was rounded to 30 minutes, thereby appearing to be compliant, even though the time taken was less than 30 minutes. Although the plaintiff conceded the rounding policy overcompensated the class as a whole, she argued the policy failed to provide full payment for potential meal period violations because the time-keeping software overlooked noncompliant meal periods because of the rounding policy.

Employers Cannot Round Time Punches for Meal Periods

Put simply, the California Supreme Court found that employers cannot round time punches for meal periods. The court seated the legal inquiry on whether the employer’s rounding policy resulted in proper payment for meal period violations. Under the Wage Orders, a meal period violation prompts premium pay obligations for the employer. Keeping with its respect for the purpose of the Wage Orders, the court noted that rounding potentially conflicts with the precise time requirement because the time keeping inherent to the practice infringes on an employee’s right to a full 30-minute meal period. The court held even a “minor infringement” of Wage Order requirements, such as a meal period of 28 or 29 minutes, triggers an employer’s premium pay obligations.

The court acknowledged the holding in See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, which concluded that “employers may use rounded time punches to calculate regular and overtime wages if the rounding policy is neutral on its face and as applied,” but ruled that the practice will not apply in the meal period context. Observing the Wage Orders’ strict policy for premium payments, the court held that a rounding practice does not produce a neutral effect because it inherently overlooks shortened meal periods, which were unreported due to rounding. This also applies to rounding at the beginning of a work shift, which may mask where a meal period was not commenced within the first five hours of work.

One potentially positive aspect of the court’s decision is the tacit approval for use of a drop-down menu to help an employer determine whether a facially noncompliant meal period should result in a meal period premium. In this instance, the court noted that where a meal period was noncompliant, the employee was prompted to identify the reason for the potential noncompliance, identifying whether the responsibility for the noncompliance falls on the employee or the employer. The court found that under appropriate circumstances, employers may comply with applicable law using a drop-down menu feature in their timekeeping software. The court explicitly noted that employers may use a drop-down feature to track meal period violations if the system properly identifies potentially noncompliant meal periods. The flaw in this case, as noted by the court, was that the drop-down prompt was not triggered in some instances based on rounded time inputs.

Noncompliant Meal Period Records Create a Rebuttable Presumption of Liability

The second major ruling contained in the court’s decision is that the court found when time records show noncompliant meal periods, a rebuttable presumption of liability attaches. Affirming its holding in Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012), the court stated that an employer needs to “ensure that it provides the employee with bona fide relief from duty and that this is accurately reflected in the employer’s time records.” As to the latter obligation, the court held the rounded time inputs potentially raise liability issues if time records show noncompliant meal periods. The rebuttable presumption that an employee was not relieved of duty and no compliant meal period was provided attaches when an employer’s records do not show a timely 30-minute meal period for a shift over five hours. Nonetheless, the court clarified that, at the summary judgment phase, the ultimate burden of persuasion remains on the moving party—whether plaintiff or defendant—to show that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law.

Because the presumption is “rebuttable,” liability does not automatically attach. Instead, employers may present evidence that the employee failed or refused to take a compliant meal period provided by the employer, or that employees were compensated for noncompliant meal periods. The court noted that representative testimony, surveys, and statistical analyses may serve as mitigating factors to reduce or eliminate liability. At the core, employers need only provide a mechanism for employees and ensure proper use, not police meal periods.

The Upshot

The Donahue decision underscores the importance of strict compliance with California’s meal period requirements, including keeping accurate meal period records. Employers received guidance on the detail necessary in capturing time on meal periods to avoid liability in the first instance and to also preserve evidence to rebut meal period claims. Indeed, the validity of the drop-down feature rests on the employer’s precise capture of employee meal periods.

At a minimum, employers should consider the following:

Have policies and practices that notify employees of the availability of timely and complete meal periods
Accurately track that employees are provided with a full 30-minute meal period that starts prior to completing the fifth hour of work (and the tenth hour for second meal periods), and do not utilize rounding
Accurately determine whether an employee is entitled to a meal period premium, and make that payment
On a practical level, employers may want to consider providing meal periods of more than 30 minutes, which start well in advance of the five- and ten-hour mark, and having a method, whether through a drop-down menu, time card attestation or otherwise, that can determine whether a meal period violation occurred and must be paid automatically.

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