We have previously discussed on this page how rounding practices can be problematic.  Now, in Donohue v. AMN Services, LLC, the California Supreme Court has provided yet another reason for employers in California to review their time rounding practices, as well as their meal period practices.

As we previously discussed, more than eight years ago in Brinker Restaurant Corp. v. Superior Court, the California Supreme Court clarified many of the general requirements for meal and rest periods under California law.  Relevant to the decision in Donohue, the Court held that employees must be provided an opportunity to take an off-duty meal period of at least 30 minutes, and that they should be provided that opportunity within the first five hours of commencing work.  (A more detailed discussion of meal period (and rest period) requirements is here.)

The History of Donohue

In Donohue, the employer had previously used an electronic timekeeping system called “Team Time” that rounded punches to the nearest 10-minute increment:  “For example, if an employee clocked out for lunch at 11:02 a.m. and clocked in after lunch at 11:25 a.m., Team Time would have recorded the time punches as 11:00 a.m. and 11:30 a.m.  Although the actual meal period was 23 minutes, Team Time would have recorded the meal period as 30 minutes.  Similarly, if an employee clocked in for work at 6:59 a.m. and clocked out for lunch at 12:04 p.m., Team Time would have rounded the time punches to 7:00 a.m. and 12:00 p.m.  In that case, the actual meal period started after five hours and five minutes of work, but Team Time would have recorded the meal period as starting after exactly five hours of work.”  The employer “relied on the rounded time punches generated by Team Time to determine whether a meal period was short [i.e., less than 30 minutes] or delayed [i.e., not provided within the first five hours].”

Donohue filed suit against AMN Services, LLC in 2014 and the trial court certified a class of non-exempt employees in 2015 based on the plaintiff’s theory that rounding meal period times was unlawful because it resulted short or late meal periods for which no premium was paid.  The employer thereafter moved for summary judgment and the trial court granted that motion, finding that there “was insufficient evidence that AMN had a policy or practice of denying employees compliant meal periods,” and that AMN’s meal period policy complied with California law, and its practice of rounding the time punches for meal periods was proper.”

Donohue appealed and the Court of Appeal affirmed the trial court’s ruling, generally agreeing with the trial court’s reasoning.  Donohue then petitioned the California Supreme Court for review, which was granted to “address two questions of law relating to the meal period claim: whether an employer may properly round time punches for meal periods, and whether time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations.”

Answering that first question, the Court held that “employers cannot engage in the practice of rounding time punches – that is, adjusting the hours that an employee has actually worked to the nearest preset time increment – in the meal period context” because California’s “meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective.”  Answering the second question, the Court held that “time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage.”  Both of these conclusions are significant.

What Can Employers Do After Donohue?

Employers that round their employees’ punches in the meal period context should immediately review their practices and determine whether, after Donohue, they can lawfully continue those practices.

The Court’s other holding impacts employers beyond those that round meal period times.  In deciding that “time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage,” the Court essentially put the burden on employers to make an initial showing that a meal period was lawfully provided when an employee’s time record reflects otherwise.  In terms of providing evidence to meet that initial showing in a lawsuit, that can be difficult where memories fade or supervisors take other employment and are no longer controllable witnesses.  As such, employers can protect themselves by implementing certain measures.  Such measures would include not only having lawful meal and rest period policies and practices in place, but also having signed acknowledgments from employees each pay period (or each week or each day) wherein employees confirm that they received, among other things, an opportunity to take at least a 30-minute meal period within the first five hours of work.

Putting It All Together

Following Donohue, entities doing business in California will want to review their timekeeping systems and may want to consider taking another look at their employees’ time records themselves to determine whether the records reflect short or late meal periods. And they may want to consider whether they even want to continue to maintain time rounding practices.