By Gregory Garbacz, Esq.
In Donahue v. AMN Services, California further tightens the compliance noose around employers’ necks in two respects. First, the Court rejects the use of any time rounding of meal breaks, even if it does not result in aggregate lost time and wages. Second, the Court makes plain that time records that show facial noncompliance, even if trivial, create a presumption of noncompliance, shifting the evidentiary burden to the employer to then prove as an affirmative defense that any noncompliance was voluntary. This decision will make defeating class certification motions relating to meal break violations difficult and will further burden the employer at trial with disproving noncompliance evident in its own time records, even if that noncompliance is trivial or de minimis.
The facts of Donohue are revealing. The holding arose from a class action challenging a temporary nurse staffing agency’s use of rounding relative to recording mandatory meal periods in its time records. The employer, AMN, used an electronic time keeping system called Team Time, which was fairly sophisticated. However, Team Time rounded meal breaks to the tenth of an hour. By way of example, if an employee clocked out for their meal break at 11:02 a.m. and clocked back in at 11:25 a.m. – a 23 minute meal period, Team Time would round the time entries to the nearest tenth of an hour, recording the meal break as 30 minutes. AMN offered expert and statistical evidence that this system resulted in a “net” overpayment to the workers when the time lost was compared to the time gained. However, Donohue argued that the system still violated California law in that it failed to record short breaks and the employer failed to pay the required meal period premium of one hour of pay for any day in which compliant meal periods were not provided.
As most California employers now know, 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 Brinker, the California 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.” (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1040.) Brinker also instructed that there is 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.
If an employer does not provide an employee with a compliant meal period, then the employer must provide the employee with one hour of premium pay for any day in which the compliant meal periods were not provided. Under the applicable wage order, even a minor infringement of the meal period triggers the premium pay obligation. 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.’” (Brinker, supra, 53 Cal.4th at p. 1040, fn. 19) To avoid liability, an employer must provide its employees with full and timely meal periods whenever those meal periods are required.
Accordingly, the Donohue Court analyzed the Brinker requirements and found that the practice of rounding meal breaks was incompatible with the requirements of California law relative to meal breaks and paying premium pay for noncompliance. The Donohue Court held that, even if the employer could show that the rounding policy resulted in a net gain of time and wages to the employees, the system still violated California law because employees also were entitled to one hour of premium pay whenever their meal break was noncompliant, even if the shortage or late break was de minimis in nature. The Court examined the underlying purpose of the meal break statute finding that it was designed to assure meal breaks for employee health reasons and any noncompliance, even trivial, violated the statute’s intent. Thus, while the Court accepted AMN’s evidence that the rounding did not result in net lost time or wages to the employees, the Court noted that it inherently resulted in loss of premium pay, because the rounded, short or late meal periods were not indicated in AMN’s records, nor was the premium paid for the noncompliant meal periods.
The Donohue Court also revisited the evidentiary standards and burden shifting caused by employee time records that, on their face, showed noncompliance. The Court held that records of noncompliance create a rebuttable presumption of noncompliance; the evidentiary burden then shifts to the employer to demonstrate, as an affirmative defense, that any noncompliance was voluntary and not caused by the employer. This evidentiary presumption applies regardless of the context, meaning at summary judgment, class certification or inevitably trial. Accordingly, wherever an employer’s time records show meal break noncompliance, even if that noncompliance is trivial or de minimis, the burden shifts to the employer to prove as an affirmative defense that the noncompliance was voluntary. Accordingly, the employer will need to show that it had a compliant meal break policy, it trained its employees on that policy and any noncompliance was strictly at the employee’s initiative and not the result of work demands or other employer-controlled factors. This will make achieving summary judgment of meal break claims, or defeating class certification of such claims, all the more difficult for employers.
Ultimately, the Donohue holding, while oppressive in its practical implications to California’s employers, provides several very clear lessons to employers who wish to steer clear of class action and PAGA claims based upon meal period violations.
First, rounding of meal breaks is never allowed; if your timekeeping system uses rounding for meal periods, it must be eliminated immediately.
Second, if an employer’s time records show meal break noncompliance, the employer had better either pay the meal period premium or be prepared to provide strong evidence in support of its affirmative defense that any meal breaks were voluntary and were not caused by the employer, including workload.
Third, the practice of rounding time records has always been questionable and is now cast in further doubt. While the practice of rounding arguably survived after the See’s Candy case (See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889), See’s Candy only approved of rounding to the 1/10th of an hour and only if the rounding policy was facially neutral and the policy as applied did not result in time and wages lost. The Donohue Court stopped short of invalidating all rounding – limiting its invalidation of rounding to the meal period context – but the Court expressly cautioned employers about rounding and pointed out the obvious. With today’s advanced technology for timekeeping, there is no longer any genuine business reason for rounding any time and doing so will unnecessarily place employers at risk of class, representative and individual wage and hour claims.
About the Author
Mr. Garbacz handles complex class action and and trials in both state and federal courts, including employment torts, wage and hour class actions, trade secret and misappropriation claims and many other types of employment-related claims. He was recognized in Best Lawyers in America® for Employment Law Management in 2019 and is a member of ABOTA (the American Board of Trial Advocates), an invitation only organization based upon jury trial experience.
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