California Supreme Court Deals Blow to Employers, Recognizing a Rebuttable Presumption of Meal Period Violation Based on Time Records Alone and Prohibiting Rounded Time Punches

shutterstock_litigationThe California Supreme Court has largely been silent on meal period questions since its seminal decision in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004 (Brinker), clarifying that an employer satisfies its obligation to provide meal periods where 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 employees from doing so….”  Brinker made clear that an employer is not obligated to police meal breaks and ensure no work is performed during these breaks.  Despite this silver lining for employers, litigation has proliferated post Brinker in the form of class actions seeking premium pay – one hour’s pay at the employee’s regular rate of compensation for each workday a meal period is not provided – as well as collective actions under the Private Attorneys Generals Act (PAGA) pursuing penalties for alleged meal period violations.

While the Brinker decision can be parsed to support an employer’s or employee’s legal position, the Supreme Court has just issued a notable class action decision in Donohue v. AMN Services, LLC (Donohue) dealing a resounding blow to employers by, for the first time, prohibiting rounding of time punches for meal periods and creating a presumption of a meal period violation based on the employer’s time records.

In that case, the employer, AMN Services, maintained policies and procedures for ensuring uninterrupted meal period and, through its timekeeping system, flagged and inquired with employees when meal periods were missed or incomplete.  As is a common practice, the timekeeping system also rounded time punches to the nearest 10-minute increment.  Ultimately, the trial court granted the employer’s summary judgment motion (i.e., seeking to dismiss the claims), finding insufficient evidence that the employer had a policy or practice of denying employees compliant meal periods and found the rounding practice to be legally compliant.  That decision was then taken up on appeal and affirmed by the Court of Appeal.

Nonetheless, the California Supreme Court reversed the appellate court, finding that “the practice of rounding time punches is inconsistent with the purpose of the Labor Code provisions and the [applicable Industry Welfare Commission] wage order.”  The Court recognized an obligation to provide premium pay for any minor infringement of the meal period entitlement – by “even a few minutes” – resulting from rounding.  The Supreme Court, in returning the case to the trial court, instructed that the following question be considered:  As for the meal periods that are short or delayed based on unrounded time punches and for which no premium wages were paid, did employees voluntarily choose to take short or delayed meal periods?

On the second issue, the Supreme Court found a rebuttable presumption of a meal period violation where the time records showed a missed, delayed or short meal period, based on the employer’s legal duty to maintain accurate records of meal periods.  The employer can then rebut that presumption “by presenting evidence that employees were compensated for noncompliant meal periods or that they had in fact been provided compliant meal periods during which they chose to work.”  Specific to that case, the Supreme Court held that, on summary judgment, “to rebut the presumption of noncompliance arising from the time records, the employer would need to provide evidence that employees voluntarily chose to work during off-duty meal periods that appear in time records to be short or delayed based on unrounded time punches.”

Takeaway for California Employers

As a result of this decision – which will certainly further spur wage and hour litigation – California employers should ensure their timekeeping systems do not round meal periods.  Businesses should also consider implementing an audit process to flag all instances where timekeeping records show California employees did not take a timely meal period of at least 30 minutes, and either (1) pay a meal period premium in all instances of an infraction; or (2) conduct an inquiry – whether through the timekeeping system or by email or in person communication – to confirm that the missed, incomplete or untimely meal period was the employee’s decision and not influenced by the employer.  We expect this rebuttable presumption to be used to place the burden on employers to prove employees did in fact take compliant meal periods or chose not to do so, which is a hefty burden when an employer is defending against a class action considering meal period practices occurring several years in the past.

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