KENNEDY DONOHUE, Plaintiff and Appellant, v. AMN SERVICES, LLC, Defendant and Respondent.
S253677
IN THE SUPREME COURT OF CALIFORNIA
February 25, 2021
Fourth Appellate District, Division One D071865; San Diego County Superior Court 37-2014-00012605-CU-OE-CTL
* Associate Justice of the Court of Appeal, Second Appellate District, Division Two, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Under California law, employers must generally provide employees with one 30-minute 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. (
In this case, we decide two questions of law relating to meal periods. First, we hold 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. The meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective. Second, we hold that time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage.
I.
Defendant AMN Services, LLC (AMN) is a healthcare services and staffing company that recruits nurses for temporary contract assignments. Between September 2012 and February 2014, plaintiff Kennedy Donohue worked as a nurse recruiter at AMN‘s San Diego offices. In that role, Donohue did not have predetermined shifts but was expected to work eight hours per day. Per AMN‘s company policy, nurse recruiters were provided with 30-minute meal periods beginning no later than the end of the fifth hour of work. AMN‘s policy and trainings emphasized that the meal period was 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 specified that supervisors should not “impede or discourage team members from taking their break.”
Until April 2015, AMN used an electronic timekeeping system called Team Time to track its employees’ compensable time. Employees used their work desktop computers to punch in and out of Team Time, including at the beginning of the day,
AMN also used Team Time to manage potentially noncompliant meal periods. Before September 2012, whenever Team Time records showed a missed meal period, a meal period shorter than 30 minutes, or a meal period taken after five hours of work, AMN assumed there had been a meal period violation and paid the employee a premium wage. In September 2012, AMN added a feature to Team Time to comply with the meal period requirements articulated in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004 (Brinker): When an employee recorded a missed, short, or delayed meal period, a dropdown menu would appear on Team Time. The dropdown menu prompted the employee to choose one of three options: (1) “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose not to“; (2) “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose to take a shorter/later break“; (3) “I was not provided an opportunity to take a 30 min break before the
AMN relied on the rounded time punches generated by Team Time to determine whether a meal period was short or delayed. Consider the example above, where a 23-minute lunch starting at 11:02 a.m. and ending at 11:25 a.m. was recorded on Team Time as a 30-minute lunch starting at 11:00 a.m. and ending at 11:30 a.m. Before September 2012, AMN would not have paid a premium wage for this lunch because it would have appeared as a full 30-minute meal period in the Team Time records. Similarly, after September 2012, the dropdown menu would not have been triggered for this lunch because it would have appeared as a compliant meal period on Team Time. In other words, Team Time would not have prompted the employee taking the lunch to indicate whether there had been a meal period violation.
In November 2016, Donohue filed a motion for summary adjudication. As to the meal period claim, Donohue argued that AMN denied its employees compliant meal periods, improperly rounded time records for meal periods using Team Time, and failed to pay premium wages for noncompliant meal periods. To support the motion, Donohue submitted her testimony that AMN had an office culture that discouraged employees from taking full and timely lunches. Donohue also provided a declaration from an expert witness, a statistics professor. According to the expert, the use of Team Time resulted in the denial of premium wages for 40,110 short lunches and 6,651 delayed lunches during the class period, which totaled $802,077.08. The expert calculated the number of noncompliant lunches for which no premium wages were paid by comparing the rounded time records for meal periods to the actual time records. For example, the expert would have counted a 23-minute lunch starting at 11:02 a.m. and ending at 11:25 a.m., recorded on Team Time as a 30-minute lunch starting at 11:00 a.m. and ending at 11:30 a.m., as an uncompensated short lunch.
AMN filed a cross-motion for summary judgment or, in the alternative, summary adjudication. As to the meal period claim,
AMN also submitted a declaration from its expert witness, a labor economist and statistician. The expert explained that because AMN‘s rounding policy sometimes rounded meal period times up and sometimes down, AMN sometimes paid employees for a few extra minutes they did not work and sometimes did not pay them for a few minutes that they did work. Unlike Donohue‘s expert, AMN‘s expert did not account for meal period premium wages that would have been paid based on actual meal period times. According to the expert, AMN‘s practice of rounding meal period times evened out over time and actually resulted in the overcompensation of the class by 85 work hours. The expert also stated that based on the nurse recruiters’ actual time punches, the average length of a meal period during the class period was 45.6 minutes.
The trial court granted AMN‘s motion for summary judgment and denied Donohue‘s motion for summary adjudication, including on the meal period claim. The court concluded there was insufficient evidence that AMN had a policy or practice of denying employees compliant meal periods. According to the court, AMN‘s meal period policy complied with
The Court of Appeal affirmed and generally agreed with the trial court‘s reasoning as to the meal period claim. The court decided that it was proper for AMN to round time punches for meal periods. (Donohue v. AMN Services, LLC (2018) 29 Cal.App.5th 1068, 1086-1092 (Donohue).) According to the court, the plain text of
The court also concluded that AMN‘s rounding policy was neutral on its face and as applied, as required by California law. (Donohue, supra, 29 Cal.App.5th at pp. 1083-1086.) The court agreed with AMN that the rounding policy fully compensated employees over time and actually resulted in the overcompensation of the class as a whole. (Id. at p. 1084.) The court rejected Donohue‘s argument that the rounding policy did not properly pay employees premium wages for meal period
In addition, the court rejected Donohue‘s argument that time records showing missing, short, or delayed meal periods give rise to a rebuttable presumption of meal period violations. (Donohue, supra, 29 Cal.App.5th at pp. 1087-1088.) In the court‘s view, this rebuttable presumption applies only at the class certification stage, not at the summary judgment stage. (Ibid.) Finally, the court considered Donohue‘s testimony that AMN‘s office culture discouraged employees from taking full and timely lunches. (Id. at p. 1091.) The court noted that Donohue never indicated a meal period violation on Team Time and always certified that her timesheet was accurate. (Ibid.) Thus, the court concluded, her testimony was insufficient to raise a triable issue of material fact as to the meal period claim.
We granted review 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.
II.
We first examine whether the practice of rounding time punches, which was developed for the purpose of calculating wages, can be properly applied to the meal period context. To be clear, the question is not whether AMN‘s rounding policy resulted in the proper compensation of employees for all time worked. Donohue does not dispute that the rounding policy overcompensated the class by 85 work hours, as AMN‘s expert concluded, when considering only compensation for time
AMN, for its part, does not argue that any meal periods rounded to 30 minutes are per se lawful. Rather, it argues that the undisputed evidence shows that no meal period violations occurred for which premium wages were not paid. AMN asserts that this evidence, regardless of its use of rounding, supports judgment on the meal period claim. But because AMN asserted that rounding applies to meal periods as an affirmative defense and because the trial court certified a meal period class on the basis of this question, the issue of rounding is properly before us.
The issue arises solely under state law because the federal Fair Labor Standards Act of 1938 (
“The IWC‘s wage orders are to be accorded the same dignity as statutes. They are ‘presumptively valid’ legislative
Wage Order No. 4, which applies to professional, clerical, mechanical, and similar occupations, applies to the certified class of AMN nurse recruiters here. (Wage Order No. 4, § 2(O).) This wage order and the relevant statute provide: “No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes . . . . Unless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an ‘on duty’ meal period and counted as time worked.” (Wage Order No. 4, § 11(A); accord,
This means that employers must generally provide “a first meal period [of at least 30 minutes] no later than the end of an
If an employer does not provide an employee with a compliant meal period, then the employer must provide the employee with premium pay for the violation. Specifically, the relevant wage order and statute provide: “If an employer fails to provide an employee a meal period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee‘s regular rate of compensation for each workday that the meal period is not provided.” (Wage Order No. 4, § 11(B); accord,
Under this provision, 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.
The practice of rounding time punches for meal periods is inconsistent with the purpose of the Labor Code provisions and the IWC wage order. The text of
The precision of the time requirements set out in
Consider, for example, an employee who is provided with a 21-minute lunch from 12:04 p.m. to 12:25 p.m. Under AMN‘s timekeeping system, which rounded time punches to the nearest 10-minute increment, the lunch would have been recorded as a 30-minute lunch from 12:00 p.m. to 12:30 p.m. In that scenario, an employee would have lost nine of the 30 minutes—or almost a third of the time—to which he or she was entitled, and Team Time would not have flagged the lunch as a meal period violation. Small rounding errors can amount to a significant infringement on an employee‘s right to a 30-minute meal period.
The premium pay structure under
The premise of this approach is that even relatively minor infringements on meal periods can cause substantial burdens to the employee. Forcing employees to work through their meal periods not only causes economic burdens in the form of extra work but also noneconomic burdens on the employees’ health, safety, and well-being. (Murphy, supra, 40 Cal.4th at p. 1113.) Employees denied compliant meal periods “face greater risk of work-related accidents and increased stress” and lose valuable time “free from employer control that is often needed to be able to accomplish important personal tasks.” (Ibid.) Shortening or delaying a meal period by even a few minutes may exacerbate risks associated with stress or fatigue, especially for workers who are on their feet most of the day or who perform manual labor or repetitive tasks. Further, within a 30-minute timeframe, a few minutes can make a significant difference when it comes to eating an unhurried meal, scheduling a doctor‘s appointment, giving instructions to a babysitter, refreshing oneself with a cup of coffee, or simply resting before going back to work.
By requiring premium pay for any violation, no matter how minor, the structure makes clear that employers must provide compliant meal periods whenever such a period is triggered. This corroborates the conclusion that rounding is improper here. A premium pay scheme that discourages employers from infringing on meal periods by even a few minutes cannot be reconciled with a policy that counts those minutes as negligible rounding errors.
The legislative history indicates that the meal period provisions are not “aimed at protecting or providing employees’ wages. Instead, [they are] primarily concerned with ensuring the health and welfare of employees by requiring that employers provide meal periods as mandated by the IWC.” (Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, 1255.) As Donohue argues, the health and safety concerns underlying these provisions distinguish the meal period context from the wage calculation context, in which the practice of rounding time punches was developed. For purposes of calculating wages, counting slightly fewer minutes one day can be made up by counting a few more minutes another day. But the same is not true for meal periods. Under the applicable statute and wage
This understanding also comports with the remedial purpose of the Labor Code and wage orders. “Because the laws authorizing the regulation of wages, hours, and working conditions are remedial in nature, courts construe these provisions liberally, with an eye to promoting the worker protections they were intended to provide.” (Prachasaisoradej v. Ralphs Grocery Co., Inc. (2007) 42 Cal.4th 217, 227.) As we have explained, rounding is incompatible with promoting strict adherence to the safeguards for workers’ health, safety, and well-being that meal periods are intended to provide.
The Court of Appeal here relied on See‘s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889 (See‘s Candy I). See‘s Candy I concluded that employers may use rounded time punches to calculate regular and overtime wages if the rounding policy is neutral on its face and as applied. (Id. at p. 907.) That court consulted a federal regulation under the Fair Labor Standards Act of 1938 that addresses rounding practices. (
Federal courts had interpreted the regulation to permit rounding policies as long as they “on average, favor[] neither overpayment nor underpayment” and do not “consistently result in a failure to pay employees for time worked.” (Alonzo v. Maximus, Inc. (C.D.Cal. 2011) 832 F.Supp.2d 1122, 1126.) Conversely, rounding policies violate the regulation if they “systematically undercompensate employees” (id. at pp. 1126-1127), such as when the rounding policy “encompasses only rounding down” (Eyles v. Uline, Inc. (N.D.Tex., Sept. 4, 2009, No. 4:08-CV-577-A) 2009 WL 2868447, p. *4).
The See‘s Candy I court observed that the Division of Labor Standards Enforcement (DLSE), the agency that enforces California‘s labor laws, had adopted the federal regulation in its manual. (See‘s Candy I, supra, 210 Cal.App.4th at p. 902; see ibid. [DLSE Manual is not binding but may be considered for its persuasive value].) The court then concluded it was appropriate to adopt the federal regulatory standard: “Assuming a rounding-over-time policy is neutral, both facially and as applied, the practice is proper under California law because its
The See‘s Candy I court believed this rounding standard is consistent with
Further, See‘s Candy I held that rounding is consistent with
Since See‘s Candy I was decided, state and federal courts have applied its standard to determine whether various rounding policies are valid under California law. (See, e.g., David v. Queen of Valley Medical Center (2020) 51 Cal.App.5th 653, 664; AHMC Healthcare, Inc. v. Superior Court (2018) 24 Cal.App.5th 1014, 1027-1028; Utne v. Home Depot U.S.A., Inc. (2017) (N.D.Cal. Dec. 4, 2017, No. 16-cv-01854-RS) 2017 WL 5991863, pp. *2-*3.) 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.
But even assuming the validity of See‘s Candy I, a rounding policy in the meal period context does not comport with its neutrality standard. As noted, failing to provide employees with full and timely meal periods burdens their health, safety, and well-being by aggravating risks associated with stress or fatigue. By deeming delayed or shortened meal breaks as “timely” and “complete” when they are not, a rounding policy erodes the health and safety protections that the meal period requirements are intended to achieve. (See Murphy, supra, 40 Cal.4th at p. 1113.) Moreover, in articulating its standard, See‘s
As noted, under AMN‘s policy, a 21-minute lunch from 12:04 p.m. to 12:25 p.m. would be recorded as a 30-minute lunch from 12:00 p.m. to 12:30 p.m. Meanwhile, a 38-minute lunch from 11:55 a.m. to 12:33 p.m. would be recorded as a 30-minute lunch from 12:00 p.m. to 12:30 p.m. This means that the rounding policy, while never triggering premium pay for compliant meal periods, does not always trigger premium pay for noncompliant meal periods. The same concern applies to the timing of meal periods; the policy never triggers premium pay for early or on-time meal periods, but it does not always trigger premium pay for meal periods that are improperly delayed.
AMN argues that its rounding policy was neutral over time because it sometimes paid employees for a few extra minutes that they did not work and sometimes did not pay them for a few minutes that they did work. AMN asserts that the policy slightly overcompensated the class as a whole. But this argument does not properly account for the underpayment of premium pay. It is true that in the 38-minute lunch example above, the rounding policy would count the extra eight minutes of lunch as work time and would trigger regular pay for those eight minutes. But in the 21-minute lunch example, the rounding policy does not trigger the “one additional hour of [regular] pay” (
We recognize that rounding was developed as a means of “efficiently calculat[ing] hours worked” and wages owed to employees (See‘s Candy I, supra, 210 Cal.App.4th at p. 903) and is useful “in some industries, particularly where time clocks are used” (
III.
We now consider whether time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations at summary judgment. We hold they do.
This rebuttable presumption was first discussed in Justice Werdegar‘s concurrence in Brinker: “Employers covered by Industrial Welfare Commission (IWC) wage order No. 5-2001
Justice Werdegar added: “As the Division of Labor Standards Enforcement (DLSE) has explained, even under the less restrictive wage order applicable to agricultural employees, if ‘a meal period is not taken by the employee, the burden is on the employer to show that the agricultural employee had been advised of his or her legal right to take a meal period and has knowingly and voluntarily decided not to take the meal period. Again, we emphasize, the burden is on the employer.’ (Dept.
The term “waiver,” as Justice Werdegar used it, should not be confused with the “waived” meal period that
As Justice Werdegar explained, an employer‘s assertion that an employee waived a meal period “is not an element that a plaintiff must disprove as part of the plaintiff‘s case-in-chief.” (Brinker, supra, 53 Cal.4th at p. 1053 (conc. opn. of Werdegar, J.).) Instead, the assertion is “an affirmative defense,” and “the burden is on the employer, as the party asserting waiver, to plead and prove it.” (Ibid.) The “plaintiff‘s case-in-chief” and the “affirmative defense” refer to the merits of the case. Contrary to AMN‘s argument, the presumption goes to the question of liability and applies at the summary judgment stage, not just at the class certification stage.
Moreover, AMN is incorrect that the presumption applies only to records showing missed meal periods; the presumption applies to records showing short and delayed meal periods as well. Providing employees with short or delayed meal periods is just as much a violation of the meal period provisions as failing to provide employees with a meal period at all.
The rationale underlying the rebuttable presumption supports these conclusions. The presumption derives from an employer‘s duty to maintain accurate records of meal periods. (Brinker, supra, 53 Cal.4th at p. 1053 (conc. opn. of Werdegar,
In addition, we reject AMN‘s argument that applying the presumption at the summary judgment stage would eviscerate the rule that employers need not police meal periods. In Brinker, we said that an “employer satisfies [meal period] obligation[s] if it relieves its employees of all duty, relinquishes
AMN misunderstands how the rebuttable presumption operates at the summary judgment stage. Applying the presumption does not mean that time records showing missed, short, or delayed meal periods result in “automatic liability” for employers. If time records show missed, short, or delayed meal periods with no indication of proper compensation, then a rebuttable presumption arises. Employers can rebut the 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
The court in Silva v. See‘s Candy Shops, Inc. (2016) 7 Cal.App.5th 235, 253-254 (See‘s Candy II) concluded that the rebuttable presumption is inapplicable when reviewing a motion for summary judgment as opposed to a motion for class certification. Similarly, the court in Serrano v. Aerotek, Inc. (2018) 21 Cal.App.5th 773 “specifically reject[ed] [the plaintiff‘s] contention that ‘time records show[ing] late and missed meal periods creat[ed] a presumption of violations,‘” even though that plaintiff‘s time records had shown “that on several days on which she worked more than six hours, she took her meal breaks more than five hours after beginning work or, in a couple of instances, did not take a meal break at all.” (Id. at pp. 781, 778.) We disapprove Silva v. See‘s Candy Shops, Inc., supra, 7 Cal.App.5th 235, and Serrano v. Aerotek, Inc., supra, 21 Cal.App.5th 773, to the extent they are inconsistent with this opinion.
We reiterate the rules set forth in Brinker: An employer is liable only if it does not provide an employee with the opportunity to take a compliant meal period. The employer is not liable if the employee chooses to take a short or delayed meal period or no meal period at all. The employer is not required to
IV.
We now apply our holdings to the facts of this case. We conclude that AMN improperly used rounded time punches to track potentially noncompliant meal periods. Before September 2012, when Team Time records showed a missed meal period or a meal period that was shorter than 30 minutes or taken after five hours of work, AMN assumed a meal period violation and paid the employee a premium wage. This system may have resulted in some overcompensation because AMN gave employees premium pay regardless of whether they voluntarily chose to work during an off-duty meal period. But this system
After September 2012, when an employee recorded a missed, short, or delayed meal period, a dropdown menu appeared on Team Time. The dropdown menu prompted the employee to choose one of three options: (1) “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose not to“; (2) “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose to take a shorter/later break“; (3) “I was not provided an opportunity to take a 30 min break before the end of my 5th hour of work.” This system also did not properly account for meal periods that were short or delayed based on unrounded as opposed to rounded time punches. The dropdown menu did not appear for such meal periods. If any of those meal periods were not voluntarily shortened or delayed, then AMN would be liable for premium pay.
The Court of Appeal reached the opposite conclusion as to the rounding policy before and after September 2012 and ruled in favor of AMN. We reverse the Court of Appeal‘s judgment as to the meal period claim and remand with directions to remand the matter to the trial court to permit either party to file a new summary adjudication motion as to the meal period claim. (See TRB Investments, supra, 40 Cal.4th at pp. 23, 31-32.) Because the parties did not have the benefit of this decision when litigating the defendant‘s summary judgment motion and the plaintiff‘s summary adjudication motion, they should now be afforded another opportunity to present relevant evidence
. . .
We provide some guidance on how the rebuttable presumption should be applied on remand in light of the usual summary adjudication standards. According to Donohue‘s expert witness, AMN‘s time records showed 40,110 short meal periods and 6,651 delayed meal periods for which premium wages were not paid; these meal periods did not show up as short or delayed in AMN‘s timekeeping system because of rounding. The introduction of these time records by either party would trigger the rebuttable presumption. If AMN renews its motion for summary adjudication, it must satisfy the initial burden of production and make a prima facie showing that “one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.” (
Conversely, when a plaintiff moves for summary adjudication, the plaintiff meets “his or her burden of showing that there is no defense to a cause of action” if the plaintiff “prove[s] each element of the cause of action entitling the party to judgment on the cause of action.” (
According to AMN, it has already established that the time records do not raise a rebuttable presumption of meal period violations. AMN argues that Donohue never used Team Time‘s dropdown menu to indicate that she was not provided with a compliant meal period, which suggests that she was never denied a compliant meal period. But because the dropdown menu was triggered by rounded time punches, this evidence does not encompass all meal periods that were short or delayed based on actual time punches. Thus, AMN cannot rely on this evidence to prove that there were no meal period violations.
AMN also contends that the biweekly certifications signed by Donohue and other class members show that there were no
We leave these issues for the parties and the trial court to address on remand. We note that if, as Donohue contends, employees would not have known about potentially noncompliant meal periods that Team Time did not flag unless they kept their own time records, then the certifications would be inaccurate and cannot be used to prove that there were no meal period violations. It is the employer‘s duty to maintain accurate time records; the law does not expect or require employees to keep their own time records to uncover potential meal period violations. (
We reverse the judgment of the Court of Appeal with directions to remand the trial court for further proceedings consistent with this opinion.
LIU, J.
We Concur:
CANTIL-SAKAUYE, C. J.
CORRIGAN, J.
CUÉLLAR, J.
KRUGER, J.
GROBAN, J.
HOFFSTADT, J.*
* Associate Justice of the Court of Appeal, Second Appellate District, Division Two, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.