Wage and Hour Case Notes

• Publication year: 2021
• Author: By Nicole R. Roysdon

WAGE AND HOUR CASE NOTES

By Nicole R. Roysdon

Nicole R. Roysdon is a Senior Associate at Wilson Turner Kosmo. She represents employers in all areas of employment law, specializing in wage and hour class and PAGA representative actions. Ms. Roysdon also advises clients regarding compliance issues to prevent future litigation and has experience drafting employee handbooks and employment agreements. She may be reached at nroysdon@ wilsonturnerkosmo.com.

EMPLOYERS MAY NOT ROUND MEAL PERIOD TIMES

Donohue v. AMN Services, LLC, 11 Cal. 5th 58 (2021)

In a highly anticipated ruling, the California Supreme Court held that employers may not round meal period time punches because the "meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective." Specifically, the court found that rounding meal periods is inconsistent with the purposes of Labor Code section 512 and California's Wage Orders, which contain precise timing requirements for meal periods "at odds with the imprecise calculations that rounding involves." Further, because meal periods are relatively short in duration, rounding even a few minutes off an employee's allotted 30-minutes is significant and can cause substantial burdens to employees both economically and with respect to their health, safety, and well-being. The premium pay requirements under Labor Code section 226.7 and the Wage Orders further reinforce this conclusion by requiring premium pay for any violation, even a meal period that is shortened or delayed by only a few minutes. The court confirmed that legislative history supports this interpretation.

The court also examined meal period rounding in the context of See's Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 (2012) (See's Candy I). Although See's Candy I held that a rounding policy is lawful so long as it is neutral on its face and as applied, rounding meal periods "does not comport with its neutrality standard." This is because the rounding never "averages out" over time. "It never provides employees with premium pay when such pay is not owed, but it does not always trigger premium pay when such pay is owed." Notably, the court pointed out it had never decided the validity of the rounding standard in See's Candy I, and although it was not asked to do so in this case, hinted that it may not agree with the decision. To that end, the court cast doubt on the necessity of rounding in the broader context, considering technological advances, such as electronic timekeeping systems, which have made it easier for employers to track time precisely.

The court also adopted Justice Werdegar's concurrence in Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012), in holding that time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage. An employer's assertion that an employee waived a meal period is not an element that a plaintiff must disprove as part of their casein-chief; rather, it is an affirmative defense and the employer has the burden of proving it. The rationale for the rebuttable presumption is that it is the employer's duty to maintain accurate records of meal periods; this ensures that employers comply with this obligation and suffer the consequences resulting from their failure to do so.

PER DIEM PAYMENTS TO TRAVELING CLINICIANS WERE COMPENSATION FOR WORK AND IMPROPERLY EXCLUDED FROM REGULAR RATE

Clarke v. AMN Services, LLC, 987 F.3d 848 (9th Cir. 2021) AMN Services, LLC (AMN)

paid plaintiffs and other traveling clinicians an hourly wage and a weekly per diem benefit. Plaintiffs filed a putative class action under the California Labor Code and a collective action under the Fair Labor Standards Act (FLSA) on the grounds that AMN improperly excluded their weekly per diem benefit from the regular rate of pay for purposes of overtime.

Under the FLSA, employers may exclude certain categories of payments from the regular rate of pay, including "reasonable payments for traveling expenses, or other expenses, incurred by an employee in the furtherance of his employer's interests and properly reimbursable by the employer; and other similar payments to an employee which are not made as compensation for his hours of employment." 29 U.S.C. § 207(e)(2). The Ninth Circuit held that AMN's weekly per diem payments to traveling clinicians were improperly excluded from the regular rate because they "functioned as compensation for work rather than as reimbursement for expenses incurred." Thus, the per diem payments should have been included in the regular rate of pay for purposes of calculating overtime under both the FLSA and the Labor Code.

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In reaching its conclusion...