Non-exempt employees must be paid for all of their work time. To simplify timekeeping calculations, many employers have adopted “rounding” practices. They record employees’ time in pre-defined increments, such as quarter hours.  Let’s say, for instance, that Tom reports to work at 8:06 a.m.  His start time would be recorded at 8:00 a.m.  If he leaves work at 4:52 p.m., his end time would be recorded at 5:00 p.m. If rounding does not benefit the employer (in other words, “rounding up” and “rounding down” evens out, or favors employees), California courts generally have approved this practice.  Of course, the devil is in the details…

So, if employers can round work time, can they adopt the same practice with meal periods?  According to the California Supreme Court, the answer is “no.”

AMN is a healthcare services and staffing company. Their employees clocked in and out for their shifts and their meal periods on desktop computers. The timekeeping system rounded time punches to the nearest 10-minute increment. If an employee clocked out for lunch at 11:01 a.m. and back in at 11:25 a.m., the time would be recorded as 11:00 a.m. and 11:30 a.m., respectively. As a result, the employee’s time record showed that the employee took a full 30-minute meal period, even though it was actually only 23 minutes.

Not surprisingly, the Court ruled that there is a distinction between “neutral” rounding policies applicable to workday start and end times, and meal period calculations. The Court explained that Labor Code section 512, which requires non-exempt employees who work more than five hours in a workday to take an unpaid and duty-free meal period “of not less than 30 minutes,” and the applicable IWC Wage Order imposing the same requirement, are inconsistent with “the imprecise calculations that rounding involves.”

Unfortunately, AMN had another problem.  It used the same electronic timekeeping system to manage non-compliant meal periods. If an employee’s meal period time entry reflected a short, delayed, or missed meal period, a drop down menu provided three options for the employee to select: (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”; or (3) “I was not provided an opportunity to take a 30 min break before the end of my 5th hour of work.”  If the employee selected that last option, then AMN assumed a meal period violation and paid the employee a meal period premium as required by Labor Code section 226.7. If the employee selected the first or second option, then AMN assumed the employee was provided a compliant meal period, but voluntarily chose not to take it as required. These employees did not receive a meal period premium.

How, you ask, did employees prove their meal period claims?  By AMN’s time records, of course. An unfortunate result for an employer who likely believed its practices would help avoid liability, not create it.

Will the Court’s decision be used to challenge rounding policies outside of the meal period context?  Maybe. The Court did not define “rounding” in its opinion.  Are some rounding practices more lawful than others?  Maybe.  Stay tuned.

The case is Donohue v. AMN Services, LLC, and you can read it here.

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