Alert: New Meal Period Requirements in California; One-Minute Mistakes Can Cost Employers Thousands of Dollars!
On Thursday, February 25, 2021, the California Supreme Court handed down a decision in Kennedy Donohue v. AMN Services, LLC that explicitly discussed rounding policies for meal periods, but implicitly changed the landscape on how an employer manages meal periods. The decision was a setback on the Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004 (“Brinker”) court’s ruling that California Employers were not required to police employee meal periods. All employers should get their patrol cars and badges ready, as policing meal periods may be required moving forward, and a great deal of liability has been created looking backwards.
The Court analyzed Defendant AMN Services, LLC’s (“AMN”) rounding policies for employee meal periods. The timekeeping software used by AMN rounded employee time punches to the nearest 10-minute increment. For example, if an employee clocked out for lunch at 11:02 a.m. and clocked back in from lunch at 11:29 a.m., the system would record the meal period as occurring from 11:00 a.m. to 11:30 a.m. (though the lunch was only 27 minutes instead of the required minimum 30 minutes). The same was true for time punches relative to the start time of the workday. If an employee began a shift at 6:59 a.m. and punched out for lunch at 12:01 p.m., the system would record the employee’s time record as starting work at 7:00 a.m. and beginning the meal period at 12:00 p.m. (though the meal period technically began more than five hours into the employee’s work time, in violation of Labor Code Section 512).
Kennedy Donohue (“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 due to the rounding issue. Donohue argued that AMN denied its employees compliant meal periods because it improperly rounded time records for meal periods through its timekeeping system. The trial court and appellate court disagreed with Donohue, concluding that AMN did not have a policy or practice of denying employees compliant meal periods, the rounding was neutral over time, and it was a practical method for calculating worktime. The California Supreme Court disagreed.
Upon appeal, the California Supreme Court considered two legal issues: (1) whether employers 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 presumption of meal period violations, including at the summary judgement stage of litigation.
The Court held that employers cannot engage in the practice of rounding time punches in the meal period context, even though time rounding in other contexts has generally been permitted under prior California decisions as well as federal law. The Court decided 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 – whether the employee did not take a full 30-minute meal period (as noted above) or whether the employee did not take a timely meal period (the meal period began even 1 minute after the 5th hour and 1 minute after the 10th hour for second meal periods) – raise a rebuttable presumption of meal period violations at summary judgment. In other words, it is the employer’s fault, unless the employer can prove otherwise.
Employers, this is the point where you must turn on your sirens. As a result of this decision, the employer has the burden to prove that the employee was provided with a legally compliant meal period (even though recorded as delayed or short), otherwise the employer owes the employee the 1-hour penalty contemplated by Labor Code section 226.7 (c). Proving this could be an unsurmountable task, especially if faced with a class action lawsuit alleging hundreds or thousands of violations across the board.
Impact on Employers
Holden Law Group recommends employers immediately audit their timekeeping system to determine if the system rounds employee time punches in the meal period context (which can include initial time punches into work since this time punch “starts” the clock for timely meal period requirements). As an aside, Holden Law Group does not recommend employers use rounding under any circumstance due to the liability attached. This Court interpretation essentially eviscerates the employer’s ability to round the start time, or lunch time, leaving only the clock-out as a legally allowable rounding option. Even if a system does not round time punches, an audit analysis should be performed to determine past liability for short or untimely meal periods. Remember, even one minute short or late triggers liability! If an employer finds that either of the concerns above exist, they should promptly seek competent legal counsel to assist in bringing their policies and procedures into compliance with this recent decision. Please note, this decision did not change the law (i.e., in which case it would only apply moving forward) but rather it provided a legal interpretation of the existing law. Therefore, it applies retroactively.
It is more important than ever for California employers to develop, with the assistance of counsel, recordkeeping policies and practices to support that they are providing employees with compliant meal periods, including, but not limited to, any records of an employee’s voluntary choice not to take such meal periods, or to take a short or late meal period.
We are hosting a free webinar on Wednesday, March 10, 2021 at 11:00 a.m. to discuss this case as well as practical guidance moving forward. Please join us and learn how to protect you and your organization, you can register here.
As always, we are here to support any questions or concerns you may have.
Sincerely,
The Holden Law Group Team