California employers should assess their meal period policies and practices in light of the California Supreme Court's February 25, 2021, decision in Donohue v. AMN Services, LLC (Donohue). This ruling: (1) prohibits California employers from rounding time punches for meal periods and (2) holds that time records showing non-compliant meal periods will raise a rebuttable presumption of liability for meal period violations.

In Donohue, the employer used a timekeeping system that rounded employees' time punches for meal periods to the nearest 10-minute increment. For example, if an employee clocked out for lunch at 11:02 a.m. and clocked in after lunch at 11:25 a.m., the system would record the time punches as 11:00 a.m. and 11:30 a.m., showing a 30 minute meal period, even though the actual meal period was only 23 minutes. Conversely, if an employee clocked out for lunch at 10:55 a.m. and clocked in after lunch at 11:34 a.m., the system would only show a 30 minute meal period even though the actual meal period was 39 minutes.

The Court acknowledged that various state and federal courts have upheld rounding policies under California law. Assuming – but not deciding – that rounding practices were valid in general, the Court found the practice was unlawful as applied to meal periods even when the rounding was facially neutral and resulted in the overcompensation of employees overall.

In reaching its conclusion, the Court noted that the precise time requirements in the Labor Code and Wage Orders – e.g., "not less than 30 minutes," and "five hours per day" or "ten hours per day" – "are designed to prevent even minor infringements on meal period requirements" and that rounding "is incompatible with that objective." The Court also observed that any meal period rounding practice cannot be neutral overall because employees must receive an hour of premium pay when their meal periods are shortened.

In the second part of its opinion, the Court held that time records showing non-compliant meal periods raise a rebuttable presumption of meal break violations. The employer can rebut the presumption by presenting evidence that either (1) the employees were compensated for non-compliant meals or (2) the employees were provided compliant, 30-minute, duty-free meal periods, but the employee voluntarily chose to work.

The Donohue decision serves as a caution to any employers with rounding policies. Given the Court's reasoning, employers should be wary of the potential problems and risks with any rounding practice, even outside the meal period context. Further, employers should evaluate their practices for recording meal periods and ensure that employees use available recording mechanisms properly. At a minimum, employers should:

• Maintain records that show employees received compliant meal breaks for each shift; or
• Obtain the employee's acknowledgment that any non-compliant meal period was his/her voluntary decision; or
• If involuntary, ensure the employee is paid a premium for the non-compliant break