On February 25, 2021, in a unanimous decision, the California Supreme Court outlawed the practice of rounding time punches for meal periods. If you are a California employer who rounds timekeeping entries for meal periods, you should review your practices immediately to make sure they do not run afoul of the law.

But even if you do not round time clock punches for meal periods, you will want to pay attention to the opinion in Donahue v. AMN Services, LLC (2021) S253677, because the court also held that time records showing missed, short, or delayed meal periods will raise a rebuttable presumption of meal period violations against the employer, thus squarely placing the burden on California employers to affirmatively show documented compliance with meal period law.

Temecula Valley employers are seeing a drastic increase in demand letters claiming failure to provide compliant meal periods and demanding five- or six--figure payments. Employees’ attorneys are threatening class action or Private Attorney General Actions (PAGA) claims in hope that the complexity and costs of litigation will result in fat settlements for their clients. Attorney Jenny Shin has experience responding to these demands and successfully resolving these cases.

Minor Meal Period Violations Trigger Premium Pay Obligation

At first glance, the employer in the Donahue case appeared to have done everything right when it came to meal periods. AMN had company policies providing employees 30-minute meal periods beginning no later than the end of the fifth hour of work and company policies and trainings emphasized that the meal period must be an “uninterrupted 30 minute” break, during which employees were “relieved of all job duties,” were “free to leave the office site”, and “control[led] the time.”

The policy also stated that supervisors should not “impede or discourage team members from taking their breaks.” AMN used an electronic timekeeping system to track its employees’ work time and to manage potentially noncompliant meal periods. When an employee recorded a missed, short, or delayed meal period, a dropdown menu prompted the employee to choose one of three options clarifying the reason for the noncompliant break and employees had to choose an option from the dropdown menu before they were able to submit their timesheet.

If the reason was that the employee voluntarily chose to have a noncompliant meal break, the system assumed the employee was provided with a compliant meal period but voluntarily chose not to take it, and no premium pay was provided. If the employee chose the option specifying that the employee was not provided an opportunity for a compliant meal break, the system would assume there had been a meal period violation and it would automatically pay the employee premium pay. In addition, AMN employees were required to sign a certification statement confirming the accuracy of their timesheet before they were paid.

Unfortunately for AMN, the timekeeping system they relied on rounded the time punches to the nearest 10-minute increment, which resulted in meal periods of less than 30 minutes being rounded up and, because the meal period appeared to comply, the dropdown menu designed to flag a potential violation was not triggered when there was a rounded-up entry. Even though the time was sometimes rounded up and sometimes it was rounded down, the Supreme Court found that “even a minor infringement of the meal period triggers the premium pay obligation.”

Lack of Accurate Meal Period Records Can Lead to Serious Consequences

The Supreme Court reviewed whether time-keeping practices that rounded time entries were proper in the meal period context, as opposed to the generally accepted practice of rounding shift start and end times. The court concluded that, “[r]ounding policies [affecting meal periods] are at odds with the requirement that employers pay the full premium wage for meal period violations.” The court reasoned that health and safety concerns underlie the purpose of the meal period provisions of the California Labor Code and IWC Wage Orders and “even relatively minor infringements on meal periods can cause substantial burdens to the employee.”

It is worth noting that the Supreme Court has essentially put employers on notice that rounding policies in general will be disfavored. (“This court has never decided the validity of the rounding standard articulated in See’s Candy I, and we are not asked to do so here…As technology continues to evolve, the practical advantages of rounding policies may diminish further.”) If the writing is on the wall, now is the time to carefully review any rounding practices to ensure the benefits still outweigh the risks of a class action or PAGA lawsuit.

California’s top court also ruled that time records showing a missed, short, or late meal period will raise a “rebuttable presumption” of meal period violations. Employers should remember that it potentially only takes a single violation to support a PAGA lawsuit. To overcome this presumption, the employer must show it did more than simply not prevent or interfere with an employee’s ability to take the required meal break. California employers must have accurate time records that show compliant meal periods have been provided and taken or face serious consequences. We encourage you to work with your employment counsel to review your meal period practices and record-keeping to make sure you are one step ahead on compliance in this heavily litigated area.

Key Takeaways

• Immediately review any practice of rounding time entries for meal periods and cease any rounding practices that may run afoul of the law, especially rounding of start time and any meal period time punches.
• Provide employees working 6 hours or more an uninterrupted and duty-free 30-minute meal period that must be taken before the end of the 5^th Another such meal period must be provided before the end of the 10^th hour for employees working 12-hour shifts.
• Employees can voluntarily work through their lunch. Be sure to get documentation from the employee showing that the employee chose to not have a compliant meal period. There is no meal period violation if an employee voluntarily chooses to work during a meal period, as long as the employer:

1. 1. Relieves the employee of all work duties,
   2. Relinquishes control over their activities,
   3. Permits employees a reasonable opportunity to take an uninterrupted 30-minute break;
   4. Does not impede or discourage the employee from doing so; and
   5. Completely and accurately records its compliance with California law, including documentation from the employee that it was the employee’s choice to forego or take a shorter meal period.

• Have a human review the time records. When the actual times that an employee works reveal a meal period violation, the employee must be paid one hour of pay at their regular rate as “premium pay” for the violation in addition to being paid for the time worked during the meal period if the employer “knew or reasonably should have known that the worker was working through the authorized meal period.”
• If you are concerned about your meal period practices, and to head off a class action or PAGA lawsuit at the pass, consider performing a self-audit of the actual time worked by your workforce for the past 4 years (the maximum statute of limitations for wage and hour violations) and ensure that employees receive premium pay for each violation. If the employer had access to the actual time worked and therefore “knew or should have known” of the violations, employees must also be paid for the total amount of time they worked through their meal periods.

For information on other proactive strategies to ensure proven compliance, contact our law office.

Ensuring Compliance With California Wage and Hour Regulations

Attorney Jenny Shin has more than 20 years’ experience advising California employers of all sizes on wage and hour compliance issues. Contact JDS Law to schedule a no-obligation consultation via telephone, video conference, or in person in JDS Law’s Temecula office.

Before adopting any one or more of the strategies presented in this article, employers should consult with their legal counsel. The above information is provided for educational use and is not to be considered legal advice for anyone’s specific situation. Jenny Shin is an attorney licensed to practice in the State of California who practices through JDS Law, Inc., a professional law corporation located in Temecula, California.