In Donohue v. AMN Services, LLC, the California Supreme Court considered how California’s meal break requirement intersects with rules that permit employers to base wages on “rounded” time. As is common in class action wage claims, both the employee and the employer relied on expert opinions to establish their claims and defenses.
Meal Break Rules
California requires employers to give their employees an unpaid 30-minute meal break if an employee works a shift that is longer than 5 hours and another if the employee’s shift lasts longer than 10 hours. The meal break must be provided within the first five hours of an 8-hour shift. A penalty is assessed if the employer violates the meal break rules.
Federal law does not require employers to give meal breaks to employees, but it does define when meal breaks count as “hours worked” for purposes of minimum wage and overtime. A meal break can only be unpaid if the employee is relieved of all job duties. When an employee is required to sit at her desk and answer the phone while eating lunch, the employee is working and must be paid for the meal break.
If the break is relatively short (so that it might be classified as a “snack break” or “bathroom break” rather than a “meal break”), the employee must be paid for the break. A ten-minute break, for example, isn’t a meal break.
Rounding rules generally allow employees to calculate wage payments by rounding the hours an employee worked. For example, if a timecard shows that the employee worked eight hours and two minutes, the employer can round the time down to eight hours.
Federal rules require employers to choose reasonable increments for rounding. For example, they can’t round to the nearest half hour. Thus, employers cannot avoid paying overtime when an employee works for eight hours and twelve minutes during each day in a five-day workweek by basing pay on five eight-hour days.
Employers also need to follow a neutral rounding policy rather than a policy that favors the employer. In simple terms, employers can’t round down unless they also round up in an equivalent way. For example, an employer can round to the nearest quarter hour by rounding 8 hours and 6 minutes down to 8 hours, but only if it also rounds 8 hours and 9 minutes up to 8 hours and 15 minutes.
Donohue worked as a nurse recruiter for AMN. Company policy entitled her to a full 30-minute meal break. Donohue kept track of her work hours by using a program called Team Time on her desktop computer. She “punched in” when she began her shift and “punched out” when she ended her shift. She “punched out” when she began her lunch period and “punched in” when she returned to work.
Team Time automatically rounded time to the nearest ten minutes. If Donohue punched out at 11:02 a.m. and punched in at 11:25 a.m., Team Time recorded her meal break as lasting from 11:00 a.m. to 11:30 a.m. Consequently, her 23-minute meal break would be rounded to a 30-minute break.
In an apparent response to California law, Team Time added a dropdown menu to its program. When Team Time recorded a meal break of less than 30 minutes, it asked the employee if the employee had been given the choice to take a 30-minute break and was “voluntarily” taking less time. If the employee clicked a statement to affirm that the short meal period was voluntary, the program recorded a full 30-minute break, and the employee was denied any overtime that might result from recording the actual work time.
The dropdown menu only appeared if the rounded time showed less than a 30-minute break. In the example above, the employee would not see the dropdown menu because her 23 minutes of work time was rounded to 30 minutes of work time.
Donohue argued that rounding time spent in meal periods deprived her of overtime wages required by California law. She brought her claim as a class action on behalf of all nurse recruiters who were employed during the relevant time period.
Donohue supported her claim with the declaration of a statistics professor. The professor examined AMN’s payroll records and determined the overtime wages that class members would have received if their short meal periods had not been rounded up to 30 minutes. The professor concluded that employees were denied overtime wages for 40,110 lunches in which they took a break for less than 30 minutes.
California law also entitles employees to an additional hour of pay if a full meal period is not provided within the first five hours of a shift. The professor concluded that class members suffered 6,651 delayed lunches. He determined that lost wages from overtime plus the penalty for lost and delayed lunches totaled about $802,000.
AMN countered with a declaration from its own expert witness, a statistician who was also a labor economist. The expert opined that employees are paid for their full time because AMN sometimes rounds up and sometimes rounds down. Employees might therefore be paid for minutes they didn’t work in some weeks and not paid for minutes they worked in other weeks. The expert determined that the rounding of meal periods evens out over time, so employees do not lose pay in the long run.
Supreme Court Analysis
The trial court granted summary judgment to AMN. The court noted that employers are generally permitted to round time shown on time records for a workday if they do so in a way that does not consistently favor the employer. The court saw no reason why that rule shouldn’t apply to meal periods. The court also accepted the opinion of AMN’s expert that the rounding policy fairly compensates employees over time.
The California Supreme Court reversed the summary judgment. It concluded that AMN’s expert did not prove that AMN complied with the law. The expert analysis assumed that rounding rules applicable to time worked in a workday are also applicable to meal breaks.
Rounding rules governing a workday are generally focused on assuring that employers do not cheat their employees out of overtime compensation. The California Supreme Court viewed California’s meal break rule as serving a broader purpose. California law protects an employee’s right to take a full 30-minute break. That right is in addition to the right to be paid for hours actually worked.
Requiring employers to provide a 30-minute break protects the health of employees. Denying breaks increases an employee’s stress and fatigue, making workplace accidents more likely. Cutting a break short also diminishes the employee’s opportunity to eat a full meal or finish errands during a break period.
The court decided that a law guaranteeing a break of “not less than 30 minutes” per workday was inconsistent with rounding break time down to less than 30 minutes. Treating a 24-minute break as if it were a 30-minute break cheats the employee out of the benefits of a full break even if the rounding rules do not necessarily cheat the employee out of compensation over the course of a full week. Rounding thus excuses employers from their obligation to provide full 30-minute breaks.
In the court’s view, “rounding is inappropriate in the meal period context.” When employees are working for a few minutes during their 30-minute meal break, they are entitled to be compensated for those few minutes, including the penalty that California imposes on employers who do not give employees the full 30-minute break.
Since AMN’s expert based his opinion on an incorrect view of the law, the trial court erred by basing summary judgment on the expert’s declaration. The court remanded the case so that each party could file new summary judgment motions based on the supreme court’s new interpretation of California law.