Donohue v. AMN Services, LLC

• Decision Date: 25 February 2021
• Docket Number: S253677
• Citation: 11 Cal.5th 58,481 P.3d 661,275 Cal.Rptr.3d 422
• Parties: Kennedy DONOHUE, Plaintiff and Appellant, v. AMN SERVICES, LLC, Defendant and Respondent.
• Court: California Supreme Court

11 Cal.5th 58

481 P.3d 661

275 Cal.Rptr.3d 422

Kennedy DONOHUE, Plaintiff and Appellant,

v.AMN SERVICES, LLC, Defendant and Respondent.

S253677

Supreme Court of California.

February 25, 2021

Sullivan Law Group, William B. Sullivan, Eric K. Yaeckel, Clint S. Engleson, San Diego; Niddrie Addams Fuller Singh and Rupa G. Singh for Plaintiff and Appellant.

Cohelan Khoury & Singer and Michael D. Singer, San Diego, for California Employment Lawyers Association as Amicus Curiae on behalf of Plaintiff and Appellant.

H. Scott Leviant and Dennis F. Moss, Los Angeles, for Moon & Yang, APC, Clients of Moon & Yang, APC, and Moss Bollinger LLP as Amici Curiae on behalf of Plaintiff and Appellant.

DLA Piper, Mary C. Dollarhide, San Diego, and Betsey Boutelle for Defendant and Respondent.

Jones Day, George S. Howard, Cindi L. Ritchey, San Diego, and Raymond W. Duer, San Francisco, for Employers Group and California Employment Law Council as Amici Curiae on behalf of Defendant and Respondent.

Opinion of the Court by Liu, J.

Under California law, employers must generally provide employees with one 30-minute meal period that begins no later than the end of the fifth hour of work and another 30-minute meal period that begins no later than the end of the tenth hour of work. ( Lab. Code, § 512, subd. (a) ; Industrial Welfare Commission (IWC) wage order No. 4-2001, § 11(A) (Wage Order No. 4).) If an employer does not provide an employee with a compliant meal period, then "the employer shall pay the employee one additional hour of pay at the employee's regular rate of compensation for each workday that the meal ... period is not provided." ( Lab. Code, § 226.7, subd. (c) ; Wage Order No. 4, § 11(B).)

In this case, we decide two questions of law relating to meal periods. First, we hold that employers cannot engage in the practice of rounding time punches — that is, adjusting the hours that an employee has actually worked to the nearest preset time increment — in the meal period context. The meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective. Second, we hold that time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage.

In light of our holdings, we reverse the Court of Appeal's judgment and remand the matter to permit either party to bring a new summary adjudication motion as to the meal period claim. (See TRB Investments, Inc. v. Fireman's Fund Ins. Co. (2006) 40 Cal.4th 19, 23, 31–32, 50 Cal.Rptr.3d 597, 145 P.3d 472 ( TRB Investments ).) The remand offers the parties the opportunity to present evidence and arguments bearing on the question of liability in light of our analysis here.

I.

Defendant AMN Services, LLC (AMN) is a healthcare services and staffing company that recruits nurses for temporary contract assignments. Between September 2012 and February 2014, plaintiff Kennedy Donohue worked as a nurse recruiter at AMN's San Diego offices. In that role, Donohue did not have predetermined shifts but was expected to work eight hours per day. Per AMN's company policy, nurse recruiters were provided with 30-minute meal periods beginning no later than the end of the fifth hour of work. AMN's policy and trainings emphasized that the meal period was an "uninterrupted 30 minute" break, during which employees were "relieved of all job duties," were "free to leave the office site," and "control[led] the time." The policy also specified that supervisors should not "impede or discourage team members from taking their break."

Until April 2015, AMN used an electronic timekeeping system called Team Time to track its employees’ compensable time. Employees used their work desktop computers to punch in and out of Team Time, including at the beginning of the day, at the beginning of lunch, at the end of lunch, and at the end of the day. Employees could also ask to manually adjust any inaccurate time punches — for example, if they forgot to clock out for lunch or if they worked when they were clocked out. For purposes of calculating work time and compensation, Team Time rounded the time punches 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., Team Time would have recorded the time punches as 11:00 a.m. and 11:30 a.m. Although the actual meal period was 23 minutes, Team Time would have recorded the meal period as 30 minutes. Similarly, if an employee clocked in for work at 6:59 a.m. and clocked out for lunch at 12:04 p.m., Team Time would have rounded the time punches to 7:00 a.m. and 12:00 p.m. In that case, the actual meal period started after five hours and five minutes of work, but Team Time would have recorded the meal period as starting after exactly five hours of work.

AMN also used Team Time to manage potentially noncompliant meal periods. Before September 2012, whenever Team Time records showed a missed meal period, a meal period shorter than 30 minutes, or a meal period taken after five hours of work, AMN assumed there had been a meal period violation and paid the employee a premium wage. In September 2012, AMN added a feature to Team Time to comply with the meal period requirements articulated in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 139 Cal.Rptr.3d 315, 273 P.3d 513 ( Brinker ): When an employee recorded a missed, short, or delayed meal period, a dropdown menu would appear on Team Time. The dropdown menu prompted the employee to choose one of three options: (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"; (3) "I was not provided an opportunity to take a 30 min break before the end of my 5th hour of work." The employee was required to choose an option before submitting his or her timesheet at the end of the pay period. If the employee chose the first or second option, then AMN assumed the employee was provided with a compliant meal period but voluntarily chose not to take one, and the employee did not receive premium pay for a meal period violation. If the employee chose the third option, then AMN assumed there had been a meal period violation and paid the employee a premium wage. In addition, at the end of each biweekly pay period, employees were required to sign a certification statement: "By submitting this timesheet, I am certifying that I have reviewed the time entries I made and confirm they are true and accurate. I am also confirming that ... I was provided the opportunity to take all meal breaks to which I was entitled, or, if not, I have reported on this timesheet that I was not provided the opportunity to take all such meal breaks ...."

AMN relied on the rounded time punches generated by Team Time to determine whether a meal period was short or delayed. Consider the example above, where a 23-minute lunch starting at 11:02 a.m. and ending at 11:25 a.m. was recorded on Team Time as a 30-minute lunch starting at 11:00 a.m. and ending at 11:30 a.m. Before September 2012, AMN would not have paid a premium wage for this lunch because it would have appeared as a full 30-minute meal period in the Team Time records. Similarly, after September 2012, the dropdown menu would not have been triggered for this lunch because it would have appeared as a compliant meal period on Team Time. In other words, Team Time would not have prompted the employee taking the lunch to indicate whether there had been a meal period violation.

In April 2014, Donohue filed a class action lawsuit against AMN. Donohue alleged various wage and hour violations, including the meal period claim at issue here. In October 2015, the trial court certified a class of all nonexempt California nurse recruiters who were employed by AMN between April 23, 2010 and April 26, 2015 with respect to the meal period claim. April 26, 2015 marks the end of the class period because on that date AMN switched to a timekeeping system that does not round time entries.

In November 2016, Donohue filed a motion for summary adjudication. As to the meal period claim, Donohue argued that AMN denied its employees compliant meal periods, improperly rounded time records for meal periods using Team Time, and failed to pay premium wages for noncompliant meal periods. To support the motion, Donohue submitted her testimony that AMN had an office culture that discouraged employees from taking full and timely lunches. Donohue also provided a declaration from an expert witness, a statistics professor. According to the expert, the use of Team Time resulted in the denial of premium wages for 40,110 short lunches and 6,651 delayed lunches during the class period, which totaled $802,077.08. The expert calculated the number of noncompliant lunches for which no premium wages were paid by comparing the rounded time records for meal periods to the actual time records. For example, the expert would have counted a 23-minute lunch starting at 11:02 a.m. and ending at 11:25 a.m., recorded on Team Time as a 30-minute lunch starting at 11:00 a.m. and ending at 11:30 a.m., as an uncompensated short lunch.

AMN filed a cross-motion for summary judgment or, in the alternative, summary adjudication. As to the meal period claim, AMN contended that it did not have a uniform policy or practice of denying employees compliant meal periods. It also argued that Donohue did not plead in the operative complaint that AMN's rounding policy resulted in meal period violations. AMN submitted the declarations of 40 class members in support of its motion. Thirty of the nurse recruiters stated that they "always" or "usually" took lunches that were at least 30 minutes long. Other recruiters said that they only "sometimes" took 30-minute lunches but...