California Supreme Court Lowers the Bar for Employees Seeking to Prove Meal Break Claims

• In Donohue v. AMN Services, LLC, the California Supreme Court held that where employees’ time records reflect a missed, late or short meal break, a “rebuttable presumption” arises that a proper meal break was not provided. This decision significantly alters the burden of proof on meal break claims, and will make it easier for plaintiffs to obtain class certification and prove liability.
• The Court gave guidance about how employers can rebut the presumption, including by incorporating a dropdown menu in timekeeping systems that require employees to give the reason for a noncompliant break.
• The Court also held that employers may not use rounded time to determine if a meal break was short or late.

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On February 25, 2021, the California Supreme Court issued a decision in Donohue v. AMN Services, LLC that significantly changes the burden of proof in cases alleging a failure to provide proper meal breaks under the California Labor Code and Industrial Welfare Commission Wage Orders. The new standard creates a “rebuttable presumption of liability when [time] records show noncompliant meal periods.” Slip op. at 25.

California law requires employers to provide nonexempt employees with an unpaid, 30-minute meal break on all shifts of greater than five hours, and the break must begin in the first five hours of work. If a proper break is not provided, the employee must be paid a premium equal to one hour of pay. However, if a proper break is provided but the employee chooses not to take the break, to take it late or to take a short break, no premium is due.

A 2012 concurring opinion by Justice Werdegar proposed that a “rebuttable presumption” should arise if an employee’s time records do not reflect that a meal break was provided. Brinker Rest. Corp. v. Superior Court, 53 Cal. 4th 1004, 1053 (2012) (Werdergar, J., concurring). Because only two of the seven justices signed on to this opinion, for years many employers have reasonably understood that the proposed standard was not the law. However, the concept of a rebuttable presumption gained steam in the mid-2010s as some Courts of Appeals cited the concurring opinion in class certification decisions, reasoning that a rebuttable presumption could assist in managing individualized issues regarding whether employees voluntarily skipped breaks. E.g., Safeway, Inc. v. Superior Court, 238 Cal. App. 4th 1138, 1159-60 (2015).

In Donohue, the Court “adopt[ed] . . . the rebuttable presumption in full.” Slip op. at 24. It explained that “[b]ecause time records are required to be accurate, it makes sense to apply a rebuttable presumption of liability when records show noncompliant meal periods.” Id. at 25. Thus, “[i]f time records show missed, short, or delayed meal periods with no indication of proper compensation [in the form of a one-hour premium], then a rebuttable presumption arises.” Id. at 26.

Although the decision undoubtedly creates challenges for employers, it does provide some guidance for employers moving forward. It explains that employers must “give employees a mechanism for recording their meal periods” and “ensure that employees use the mechanism properly.” Id. at 27. One such way is to incorporate a “dropdown menu” in the timekeeping system that comes up if an employee misses a meal break, or takes a late or a short break, and requires the employee to explain the reason for the noncompliant break (i.e., whether a proper break was not provided or whether it was the employee’s choice). Id. at 28. Because this solution has been explicitly endorsed by the Court, it may become a standard feature of commercial timekeeping software, and could prove to be valuable insurance against meal break liability.

In the same opinion, the Court also held that employers may not use rounded time punches to determine whether meal breaks were timely provided or lasted the full 30 minutes required by law. Id. at 12. Beginning in 2012 with See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 (2012), a unanimous line of cases from the California Court of Appeals has held that employers may round employees’ time punches to calculate wages due if the rounding policy is neutral on its face and as applied.

The Court cast no doubt on these decisions generally, but ruled that, in the meal break context, which is designed to safeguard workers’ health and safety, “[t]he precision of the time requirements . . . is at odds with the imprecise calculations that rounding involves.” Slip op. at 12, 19. “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,” even where the rounding policy, in the aggregate, overpays employees for time worked. Id. at 14, 20. Therefore, “employers cannot engage in the practice of rounding time punches . . . in the meal period context.” Id. at 1.

Employers who use time rounding are well-advised to examine their rounding practices to ensure that they are consistent with this ruling. Additionally, although the Court did not opine on the lawfulness of time rounding in general, it ended its discussion with this cryptic observation: “As technology continues to evolve, the practical advantages of rounding policies may diminish further.” Id. at 21. There is no indication that the Court would actually reject time rounding completely, but employers can expect the Court’s concluding statement on rounding to encourage plaintiffs’ lawyers to continue challenging neutral rounding practices, even as Courts of Appeal have consistently rejected such claims.