Employer Wins A Round In Wage Case

Seyfarth Synopsis: In Donohue v. AMN Services, LLC, a class action alleging unpaid wages, the California Court of Appeal affirmed a summary judgment for the employer, upholding a rounding policy that was neutral on its face and was accompanied by an attestation of meal period compliance.

The Facts

Kennedy Donohue worked as a nurse recruiter for AMN Services in its San Diego office from September 2012 to February 2014. AMN used a computer-based timekeeping system called Team Time, which rounded punch-in and punch-out times to the nearest 10-minute increment. Punch times between 7:55 a.m. and 8:04 a.m. would thus be recorded as 8:00 a.m. Donohue alleged she was discouraged from taking meal and rest breaks, and often had to take short breaks.

AMN’s written policy stated that recruiters were provided meal and rest breaks in accordance with California law, and were to accurately report their meal breaks. The policy also stated that recruiters were paid a premium whenever their time records indicated that they had not taken a 30-minute meal within the time frames established by the California Wage Orders. When Donohue joined AMN in September 2012, AMN had a policy of automatically paying a premium for meals that were not taken within these time frames, but then soon changed its practice—whenever a recruiter had a meal period that appeared to be late or short based on the time that the employee reported for the meal period, a drop-down menu would appear and ask the recruiter to indicate whether she had the opportunity to take a timely meal period. The recruiter would get premium pay if she had not received that opportunity.

The Trial Court Decision

Donohue asserted claims against AMN for meal and rest period violations, unpaid overtime, inadequate wage statements, unreimbursed business expenses, unpaid waiting-time penalties, and unfair business practices. Donohue also sued under the Private Attorneys General Act. In October 2015, the trial court certified five classes of non-exempt employees.

Thereafter, the Parties filed cross-motions. Donohue moved for summary adjudication of one cause of action and one affirmative defense, and addressed the rounding issue. AMN moved for summary judgment on eight issues. The trial court granted AMN’s motion and denied Donohue’s. Donohue appealed.

The Appellate Court Decision

The Court of Appeal affirmed the trial court’s judgment. On the issue of rounding, the Court of Appeal relied on See’s Candy Shops, Inc. v. Superior Court to hold that AMN’s rounding policy was neutral on its face and was used in a manner that did not result in a failure to pay employees over time. The Court of Appeal relied on the testimony of AMN’s expert, who analyzed the actual and rounded punching times of 311 recruiters to conclude that AMN’s rounding practice resulted in a net surplus of 1,929 work hours in paid time for the class as a whole. Donohue’s expert, meanwhile, had found that AMN’s rounding policy led to a failure to pay employees for over 2,500 hours worked. But the Court of Appeal was not persuaded by Donohue’s expert, who had failed to consider evidence that class members may have gained more compensated work time under the rounding policy than they had lost.

On the issue of meal periods, the Court of Appeal rejected Donohue’s argument that a rounding policy could not be applied to meal period punches. The Court of Appeal reasoned that the standard set forth in See’s Candy should extend to meal periods. The Court of Appeal further reasoned that a trial court, under See’s Candy I, need only consider how often a policy results in rounding up and rounding down, not the number of meal-period violations that are assessed or avoided. Finally, relying on the signed attestations of meal period compliance that accompanied every timesheet reflecting what appeared to be a late or short meal period, the Court of Appeal rejected Donohue’s argument that she was often provided with short meal breaks and was generally discouraged from taking meal breaks.

The Court of Appeal also affirmed summary judgment for AMN on the issue of rest periods, holding that Donohue had failed to establish a uniform policy or practice of denying rest breaks. AMN had established that its written policy complied with California law, and though Donohue testified that rest breaks were discouraged, she could not recall ever being told that she could not take a rest break.

Finally, the Court of Appeal affirmed summary judgment in AMN’s favor with respect to Donohue’s PAGA claim, because Donohue had failed to establish that she was an aggrieved employee. The Court of Appeal relied upon the fact that Donohue had repeatedly represented to the court that her PAGA claim entirely derived from her other claims.

Relying on Lopez v. Friant & Associates, LLC, Donohue argued that she need not establish an individual claim to bring a PAGA claim. Lopez held that an employer whose wage statement failed to record an employee ID number could be subject to PAGA penalties, even though the mistake was inadvertent and promptly corrected, and even though the employee admittedly suffered no injury since his employer reminded him each pay period what the last four digits of his SSN are. Lopez permitted the employee to sue for PAGA penalties without needing to prove any “injury” or any “knowing and intentional” violation. Rejecting Donohue’s argument, the Court of Appeal held that because Donohue had failed to establish any wage-statement violation, Lopez did not apply.

What Donohue Means For Employers

The AMN case holds that a rounding policy that results in apparent meal period violations may be permissible, provided, however, that employees sign attestations with their timesheets that state they have been provided with a lawful meal period. The case also reminds employers that it is beneficial to set up a system prompting employees to report non-compliant meal breaks.