On February 25, 2021, the California Supreme Court issued an important decision holding that employers cannot use “rounding” of time entries when providing mandatory meal breaks if the rounding results in less than the required break period.  In California, employers generally must provide non-exempt employees with a 30-minute meal period for any work period of more than five hours.  If the employer fails to do so, the employee is entitled to an additional hour of pay for each workday that a meal period is not provided.  The Court's decision, Donahue v. AMN (available here), may require employers to change their use of rounding. 
 
Plaintiffs filed a class action lawsuit against AMN, a healthcare services and staffing company, alleging meal break violations under California law.  Defendant had a time-keeping policy of rounding to the nearest 10-minute increment when employees clocked in and out for their shifts and lunch breaks.  For example, if an employee clocked out for lunch at 12:04PM and clocked back in at 12:25PM, the entries would adjust to 12:00PM and 12:30PM, such that a 21-minute lunch would appear in the employer’s records as a 30-minute lunch not triggering a missed break premium.
 
The California Supreme Court held that rounding practices that deny an employee a full and timely meal break are inconsistent with legislative intent.  The Court reasoned that the precision of the time requirements in California’s meal break laws – “not less than 30 minutes” and “five hours per day” or “ten hours per day” – is at odds with the imprecision of rounding.  The Court noted that even small rounding errors are a “significant infringement” on the right to a 30-minute meal period.
 
Additionally, the Court held that records showing non-compliant meal periods raise a rebuttable presumption of meal period violations, applying to records that show missed meal breaks as well as shortened or delayed meal breaks.  The presumption goes to the question of liability and applies at the summary judgment stage, not only at the class certification stage as Defendant had argued.  The Court emphasized that uncertainty of proof caused by an employer’s failure to keep accurate records is a burden that falls on the employer, not the employee.   Posted by Ally Girourd

On February 23, 2021, the Ninth Circuit tackled the difficult issue of when California’s labor laws apply to employees whose duties take them into other states.  The case involved a class of California-based flight attendants alleging that Virgin had failed to pay them minimum wage and overtime, provide them with meal and rest breaks, and provide them accurate wage statements and pay them all wages due at the time of discharge.  Although class members spent only an average of 31.5% of their time in California, the vast majority of Virgin’s flights (as high as 99% in some years) either took off from or landed in California, and the Company is based here.  Defendant took the difficult position that California labor law did not apply, but that no other state’s law did either.  The trial court certified the class, held that California law applied, rejected the argument that the Federal Aviation Act preempted the claims, and granted summary judgment in favor of the class. 
 
The Ninth Circuit’s ruling was generally but not entirely favorable to the class.  After affirming on the preemption issue, the Court applied a recent California Supreme Court decision involving United Airlines flight attendants and noted that each of the class’s claims had to be examined separately to determine whether California law applies.  (This seems to present employers with the same daunting task in attempting to comply with the law.) 
 
With respect to the minimum wage claim, the Court applied California law but held that Virgin’s pay methodology did not necessarily result in minimum wage violations, and reversed the grant of summary judgment.  With respect to overtime and meal and rest breaks, the Ninth Circuit held that California law applied, given Virgin’s status as a California employer and “the circumstances of this case.”  Citing the landmark decision in Sullivan v. Oracle Corp., 51 Cal. 4th 1191 (2011), the Court held that the public policy goals behind the overtime and break laws would be thwarted by holding that Virgin was not required to comply when sending its workers across the border.  The Court also found that California’s law governing wage statements and payment of wages owed at time of discharge applied, noting that the connections between the class’s work and California sufficed under the prior United Airlines case.
 
Lastly, in a potentially important win for employers, the Ninth Circuit weighed in on the calculation of penalties under the Private Attorneys General Act (“PAGA”).  PAGA, which allows employees to recover penalties on behalf of the state, couches penalties in terms of a smaller penalty (often $100) for each “initial violation” and a larger penalty (often $200) for each “subsequent violation.”  The California Supreme Court has yet to rule on what constitutes an “initial” versus a “subsequent” violation.  The Ninth Circuit held that because Virgin had not been found by a court or the Labor Commissioner to be subject to California law prior to the district court’s decision, all of the PAGA violations were “initial” violations.  This potentially has a large impact on penalty exposure in PAGA cases generally, although in other factual circumstances there will be room to argue that employers were on notice of violations even if they had not been held to be in violation by a court or the Labor Commissioner.
 
The decision, Bernstein v. Virgin America, No. 19-15382 (9th Cir. 2021), is available here.

Posted by Ally Girouard