In a case widely lauded as pro-employer, the California Court of Appeal in the Fourth District recently agreed with the trial court that a health staffing company's use of time-rounding software to track its employees' required meal breaks was fair and neutral and allowed under state law.
In Donohue v. AMN Service, LLC, Kennedy Donohue, a former nurse recruiter brought a class action suit against her former employer, AMN, for violations of state wage-and-hour laws. While the opinion deals with several complex legal and factual issues, the significance of the holding is reflected in two of the court's main conclusions:
· The meal-break tracking program, which includes a time-rounding component, complies with state wage-and-hour laws.
· It was appropriate to apply the legal test used before to determine whether time-rounding was legal in determining the beginning of a shift also to time-rounding practices used in recording meal breaks.
Meal break requirements
After five hours of work, an employee in California must get an unpaid, duty free meal break of at least 30 minutes. When this meal period is not provided, or is taken late, the employer must pay the employee an extra hour of pay for that day. (The extra one hour of pay does not apply where the employee works no more than six hours total in a workday and waives the meal period by mutual consent with the employer.)
Fair, neutral time-rounding practices
California employers are entitled to use a rounding policy to account for their employees' shift start and end times, so long as the rounding practice that is "fair and neutral on its face" and does not fail over time to properly compensate workers for actual time worked may be used. "Fair and neutral" means that over a period of time, the rounding up and rounding down average out and do not "systematically undercompensate employees." In other words, the rounding policy must be neutral both on its face and in actual application.
Here, AMN used software that applied a rounding policy to its employees' clock out and clock ins for meal periods.
Basically, the Donohue court found that AMN's expert witness, a labor economist, who conducted a detailed, extensive analysis of records, had established that the time-entry system used by AMN, which rounded the actual times punched to the closest 10-minute increment in either direction and paid wages based on the "rounded, not actual times clocking in and out," was neutral "in the long run," not favoring either party.
The court concluded that Donohue's expert witness, who based his testimony on the actual times the recruiters punched out and in for their meal periods, did not adequately account for an application of AMN's rounding policy to the actual meal period punches, and therefore did not adequately rebut AMN's expert evidence.
Standard appropriate to apply to meal breaks
The court reasoned that state courts have accepted rounding practices in time keeping since "at least 2012" and that the practice could apply to meal-break timekeeping in the same way it has to shift-beginning timekeeping. The neutrality requirement of the particular rounding practice "contains no limitation to suggest it does not apply (or should not be applied) to meal periods."
The time-rounding software used by AMN was sophisticated. Whenever there was a noncompliant meal period, the employee was required to complete a drop-down menu and select an option explaining why. If the meal period was not provided, the software automatically applied one hour of additional pay. However, if the meal period was provided, but the employee chose not to take a nonworking 30-minute meal period before the end of the fifth hour of work, in accordance with AMN's policy, it was concluded that the employee voluntarily chose a noncompliant meal period and no additional hour of pay applied. Donahue never selected the option that AMN did not provide a compliant meal period.
At our law firm, we advise California employers about how to meet their legal responsibilities under federal and state wage-and-hour laws. An attorney can assist an employer in analyzing whether a time-rounding practice is legally compliant.
As of this writing on March 14, Donohue has filed a petition for review with the California Supreme Court, along with a request for depublication. We will watch for the ultimate disposition of this case and keep our readers informed.