California Supreme Court Prohibits Rounding Of Meal-Period Swipes

By Swerdlow Florence Sanchez Swerdlow & Wimmer

March 2, 2021

In a long-awaited decision, the California Supreme Court held last week that employers cannot engage in the practice of rounding employees’ time punches in the meal-period context. In Donahue v. AMN Services, LLC, No. S253677 (February 25, 2021), the Court held that California law is designed to prevent even minor infringements of meal-period requirements and that rounding (adjusting the time that an employee has actually worked to the nearest preset time increment) is incompatible with that goal. Of equally important note, the Court held that time records showing noncompliant meal periods (i.e., late, short, or missed meal periods) raise a rebuttable presumption of liability for meal-period violations for employers.

AMN Services, LLC ("AMN") is a healthcare services and staffing company that recruits nurses for temporary contract assignments. Until April 2015, AMN used an electronic timekeeping system called "Team Time" that rounded all employee time punches to the nearest 10-minute increment. This rounding occurred at the beginning of the day, at the beginning of the meal period, at the end of the meal period, and at the end of the day.

Donahue, a former employee of AMN, filed a class-action lawsuit alleging that AMN improperly rounded time punches for meal periods and, thus, failed to pay premium wages for noncompliant meal periods. Relying on the Court of Appeals decision in See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 (2012), the trial court ruled in favor of AMN by finding that AMN’s practice of rounding meal periods evened out over time and actually resulted in the overcompensation of the class by 85 hours. The Court of Appeal affirmed the trial court’s decision and determined that AMN’s rounding policy was neutral on its face and as applied.

However, the California Supreme Court reversed, recognizing that the question in Donahue was not whether AMN’s rounding policy resulted in the proper compensation of employees for all time worked. Instead, the Court noted that the issue before it was whether the rounding policy resulted in the proper payment of premium wages for meal-period violations. Under California law, employers in most industries must provide non-exempt employees with one 30-minute (or longer) 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. 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." Cal. Labor Code § 226.7. In Donahue, the California Supreme Court held that the precision and timing requirements of California law are at odds with the imprecise calculations of rounding. The Court noted that, given the relatively short length of a 30-minute meal period, small rounding alternations could result in a significant infringement on an employee’s right to a 30-minute meal period.

The Court reasoned that the purpose of California’s meal-period requirements is to provide for the health and safety of employees. By requiring the one-hour premium pay for even the most minor violation (i.e., a 29-minute meal period), the Court held that California law does not permit rounding meal-period time.

Secondly, the Court held that time records showing noncompliant meal periods raise a rebuttable presumption of meal-period violations, recognizing that it is an employer’s duty to maintain accurate records of meal periods. Employers can rebut the presumption by presenting evidence that employees were compensated for noncompliant meal periods or that employees had in fact been provided compliant meal periods but voluntarily elected to shorten or skip meal periods.

Going forward, California employers should immediately cease the practice of rounding employee time punches for meal periods. Additionally, in the non-meal-period context, employers also should consider eliminating the practice of rounding employees’ time, given technological advances in timekeeping and the burden on employers to prove that a rounding policy is neutral in practice. Lastly, while the Donahue decision explicitly states that employers need not "police" employee meal periods, the decision makes clear that if time records show noncompliant meal periods, a rebuttable presumption of liability for the employer arises. Thus, employers should take steps to ensure that employees begin their meal periods in a timely manner, swipe out for their meal periods, and do not swipe in from meal periods before the 30th minute. Similarly, employers should consider how they will document evidence of when employees fail to follow an employer’s meal-period rules and whether to automatically pay the extra hour of compensation per Labor Code § 226.7 to an employee who fails to follow an employer’s policies, and then discipline the employee for failing to adhere to the employer’s meal period and/or rest period rules.

Contact your SFSSW attorney if you have questions regarding California’s meal-period requirements.